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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to __________
Commission file number 0-15578
DAVOX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 02-0364368
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6 Technology Park Drive
Westford, Massachusetts 01886
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 952-0200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 Par Value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Yes _____ No X
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Aggregate market value, as of February 7, 1996 of Common Stock held by non-
affiliates of the registrant: $73,626,505 based on the last reported sale price
on the National Market System as reported by NASDAQ on that date.
Number of shares of Common Stock outstanding at February 7, 1996: 6,901,231
DOCUMENTS INCORPORATED BY REFERENCE
The registrant intends to file a definitive Proxy Statement pursuant to
Regulation 14A within 120 days of the end of the fiscal year ended December 31,
1995. Portions of such Proxy Statement are incorporated by reference in Part
III.
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PART I
ITEM 1 - BUSINESS
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GENERAL
Davox Corporation ("Davox" or the "Company") is principally a software and
systems integration company which develops, markets, implements, supports and
services management systems for call center operations. These call center
operations are responsible for business applications including
credit/collections, customer service, telephone sales, and fund raising. Davox
systems help calling operations integrate existing voice and data systems,
manage outbound and inbound calling applications and focus on improving the
quality of each customer contact, as well as the quantity of calls handled. This
increased productivity and efficiency, documented by Davox users, has resulted
in lower labor costs, increased revenue and/or increased transaction capacity
for the user organization, and improved service levels. Davox systems include
intelligent outbound calling, inbound call handling, inbound/outbound call
integration and call center network management.
Davox has provided unified call center solutions to banks, consumer finance
organizations, retailers, entertainment companies, telemarketing organizations,
and utilities. Among the company's current customers are: Chemical Bank,
Bancomer, General Electric Capital Corporation (GECC), Household Finance,
NationsBank, May Companies, AT&T, NYNEX, British Telecom, Australian Telecom,
Precision Response Corporation, Superstar Satellite Entertainment, Gottschalks
Department Stores, USAA Federal Savings Bank, and WGBH television.
Statements in this Form 10-K which are not historical facts, so-called
"forward-looking statements," are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that all forward-looking statements involve risks and uncertainties, including
those detailed in the Company's filings with the Securities and Exchange
Commission. See also "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations--Certain Factors That May Affect Future
Results."
The Company was incorporated in Massachusetts in 1981 and reorganized in
Delaware in 1982. The Company's principal offices are located at 6 Technology
Park Drive, Westford, Massachusetts 01886 and its telephone number is (508)
952-0200.
OVERVIEW
Today's businesses realize that their most important asset and source for
additional business is their customer; therefore, within most corporations,
several departments are in
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almost constant contact with buyers or users of their goods or services. These
departments, or call centers, place and/or receive phone calls, supplying
information to the customer or processing account information from a database.
The mission of call center management is to increase the productivity of
telephone agents, improve the efficiency of the calling operation and enhance
the quality of customer service.
To achieve the mission of the call center, businesses have invested in
different types of technology to accommodate different types of customer
contact, such as incoming and outgoing calls. However, these discrete
proprietary systems result in an environment characterized as "islands of
technology" which limit the productivity and efficiency of the call center and
degrade customer service. The majority of today's businesses are under economic
and competitive pressure to protect their investment in technology, and require
a method for integrating existing disparate technologies. By integrating these
technologies, a business can share its resources, and provide its customers a
higher quality of service.
Davox recognized the growing demand for systems that would unify these
disparate resources and calling applications. To deliver the level of
integration necessary to unite a business' customer contact applications, Davox
introduced in late 1993 a system which represented a new generation technology
for the call center market.
The Unison(R) call center management system relies on open system,
client/server architecture to communicate with a call center's existing and
future voice and data systems, allowing call centers to share valuable system
resources and a single data source, and to manage a more efficient customer
contact operation.
THE UNISON(R) OPEN SYSTEMS ENVIRONMENT
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The Unison(R) system's open systems-based architecture creates a flexible
environment that enables customers to realize the full potential of their call
center investments now and in the future. A customer's PBX (Private Branch
Exchange), ACD (Automatic Call Distributor) and VRU (Voice Response Unit) are
usually made by different vendors and installed at different times and even at
different locations. Furthermore, information about a specific customer may
reside on one or more databases within a legacy system(s).
A single Unison(R)-based agent workstation can handle all voice/data tasks
associated with any call -- incoming or outgoing, regardless of point of origin.
The system can track all calls in real-time, allowing managers to identify
quickly both positive and negative trends as they develop. As a result,
adjustments can be made instantly to correct unfavorable trends and exploit
positive ones.
A unique characteristic of the Unison/(R)/ system is its Rules-Based(TM)
software product which allows a call center manager to design, adjust, refine
and implement calling strategies in real time. With this Rules-Based(TM)
management capability, the Unison(R) system's user can target outbound calling
campaigns based on user-defined criteria such as location, income level, or
outstanding balance.
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This capability also allows call centers to match specific customers with
telephone agents who have the necessary skills to handle these customer
accounts. For example, foreign speaking agents can be automatically assigned to
handle calls to or from households where only that language is spoken; or agents
skilled in handling a specific product can be assigned to those accounts.
Using the Unison(R) system's Rules-Based(TM) management capability, a call
center manager can set the calling "rules" for each campaign, such as:
. The order in which phone numbers will be called,
. Acceptable talk time,
. The time of day clients will be called,
. Acceptable after call work time, and
. Which accounts will be called.
Each campaign is monitored in real-time, notifying the call center's
supervisors immediately if performance deviates from the prescribed norm,
enabling the supervisor to take immediate corrective action. The Rules-Based(TM)
management capability provides Unison(R) system users with real time information
to adapt their system "on the fly" to changing priorities within the call
center. This Rules-Based(TM) capability also helps Unison users maintain
compliance with FTC/FCC regulations.
UNISON(R) Functional Overview
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The Unison(R) family of call center management systems combines open
system, client/server, and relational database technology with sophisticated
applications. The Unison(R) system's open architecture performs equally well in
all call center environments:
. Outbound,
. Outbound/Inbound blended, and
. Inbound.
UNISON(R) Technology for a New Generation of Call Centers
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The SMART MANAGEMENT CENTER(R) (SMC(R)) is the central management engine which
implements the Unison(R) system's Rules-Based(TM) management strategies and a
broad range of software-driven features that allow the intelligent, strategic
integration of all call center resources. The SMC(R) (a UNIX RISC-based
management system built on the Sun Microsystems, Inc. SPARC architecture)
manages, monitors, processes, reports, communicates, integrates and controls a
broad range of telephony and data-oriented call center tasks -- all in real-time
and using a friendly, point-and-click graphical user interface (GUI). The SMC(R)
utilizes Sybase Incorporated relational database management software which
supports the Rules-Based(TM) management capability and is integral to call
center improvements in the areas of quality of contact, productivity,
effectiveness and resource management.
ONESTATION(TM) software product provides universal agent audio connectivity to
an existing PBX/ACD. In conjunction with installed data resources,
ONEStation(TM) functionality allows
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agents to access available voice and data resources from any single existing
workstation anywhere in the company's data network.
Smart Access(TM) software product provides a flexible management network
allowing users to:
. Access, monitor, and control multiple calling sites in real-time, and
. Distribute information and outbound call campaigns to any center on the
network.
CALL MANAGEMENT FEATURES AUTOMATE, STREAMLINE OUTBOUND OPERATIONS
The Unison(R) system's sophisticated dial and pacing technology, campaign
flow, dynamic campaign generation and filter capabilities streamline outbound
call operations by automating unproductive or time-consuming processes.
Supervisors control the parameters which affect the actual call placement,
freeing agents to focus on engaging in productive conversations with customers.
Layered upon this powerful dialing engine is Davox's broad array of real-time
campaign management/measurement capabilities.
INTELLIGENT INTEGRATION OPTIONS FOR CALL BLENDING
Because Davox understands that a single call blending solution may not be
appropriate for every call center, the Company offers both a Computer Telephony
Integration (CTI) and a non-CTI Unison(R) system option.
SMART ACD(TM) software product provides non-CTI inbound/outbound notification.
Smart ACD(TM) software:
. Interfaces with a call center's existing ACD and PBX,
. Monitors all designated ACD queues and displays inbound traffic
information in real-time, and
. Automatically and intelligently instructs agents to handle ACD queues
and outbound calling lists as necessary to maximize productivity while
maintaining the proper service levels.
SCALE(TM) (Seamless Call and Agent Load Equalization) software is available for
call centers that wish to utilize CTI for their call handling. With SCALE(TM)
functionality, all designated agents function as both inbound and outbound
agents, and the movement of those agents from inbound to outbound calls is
automatic; no separate login procedures are required. The standard Unison(R)
system campaign management capabilities are available to SCALE(TM) users. In
addition, Unison(R) agent management and real-time voice and data reporting
features are available for inbound as well as outbound agents.
SOFTWARE THAT DELIVERS VALUE THROUGHOUT A CALL CENTER
. UNISON STRATEGIST(TM) Applications Software lets supervisors specify and
modify comprehensive calling strategies.
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. UNISON TACTICIAN(TM) Applications Software makes it easy for supervisors
to monitor agent productivity during individual campaigns and shift
resources quickly when needed.
. UNISON PRECISION DIAL(TM) Applications Software streamlines call center
operations by automating processes and eliminating unproductive time-
consuming tasks.
The Unison(R) system price begins at approximately $90,000. Specific and
variable customer requirements, such as the number of agent positions, extent of
inbound integration and multi-site connectivity determine actual Unison(TM)
system prices.
MARKETS AND APPLICATIONS
Davox markets its unified call center solutions to corporations that rely
heavily on the telephone to conduct business with their customers. These
corporations have typically made large investments in building inbound and/or
outbound calling operations. The function of these operations is to place and
receive customer calls. In many cases, these calling operations are responsible
for specific business applications such as collections, customer service, fund
raising or telephone sales.
In 1991, new trends emerged in the marketplace. Customers began augmenting
outbound calling applications with inbound call handling applications, allowing
them to share system and labor resources, reduce overhead and improve the
quality of their customer contacts and overall customer service.
The Company believes that Unison(R) systems can significantly increase
productivity in many applications where repetitive tasks can be automated.
Additionally, Davox believes that its products are well suited to meet evolving
CTI standards due to their multi-protocol capabilities, integrated voice
functions, and flexible software design.
SIGNIFICANT CUSTOMERS
In 1995 the Company's largest single customer was AT&T, accounting for 12%
of total revenues. In 1994 and 1993, Chemical Bank was the largest single
customer, accounting for 9% and 12% of its total revenues, respectively. Total
revenues from the Company's top three customers amounted to 20%, 19%, and 30% of
total revenue in 1995, 1994 and 1993, respectively. The Company believes that
its dependence on any one end user customer is not likely to increase
significantly as the Company continues to penetrate the broader call center
market and expand its alternate distribution channels.
MARKETING AND SALES
Davox takes a solutions-oriented approach to marketing its Unison(R)
systems. The integration and management capabilities of the systems are
presented as tools to help customers meet their business goals and objectives
for customer service. This approach has two major benefits:
. First, as Davox's relationship with a client grows, the Company is able
to increase sales by developing additional call center capabilities for
the client.
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. Second, Davox can identify additional applications in other areas of the
customer's business.
Additionally, by focusing on common applications and identifying industries
with similar organizational or functional structures, Davox can address new
markets with relatively small incremental development costs and a short training
period for its sales force.
The Company's sales force follows a disciplined selling program that
focuses on selling business solutions, rather than stressing the features of
individual products. Having identified departments in which Unison(R) systems
may provide significant productivity increases, Davox sales representatives and
technical consultants (system/application specialists) work with the customer to
analyze the business and production objectives for the calling operation. Davox
then presents a system model with a pay back schedule. This consultative, "team"
approach is taken to establish a long-term relationship with the client.
The Company is working to expand market penetration through its Business
Partners Program. This program represents a third party distribution channel
through joint marketing and reseller relationships. Examples of third party
partners include telecommunication system manufacturers, software vendors,
computer manufacturers, and systems integrators. The Company plans to continue
to expand its Business Partners Program, with particular emphasis on customer
contact software vendors and telecommunication system providers.
In North America, the Company markets its products primarily through a
direct sales force with contributions from the Business Partners Program. Direct
sales personnel are supported by a team of marketing professionals based at the
Company's headquarters.
Davox manages international activities for three global regions -- Europe,
Latin America and the Pacific Rim. The Company's products are offered in these
regions primarily through a series of mostly nonexclusive distribution
agreements. In 1995, Davox established a European headquarters in the United
Kingdom which will provide marketing, technical support, and service to its
European distributors and end users. Also in 1995, Davox signed a distributor
agreement with LaKe Corporation of Australia to distribute the company's
products in a select number of countries throughout the Pacific region, which do
not include Japan. Davox also entered into a new agreement extending its
previous relationship with Datapoint Corporation to resell the company's
products in select countries in Europe. Davox entered into a distributor
agreement for Japan in early 1996.
In connection with sales outside the United States, Davox products are
subject to regulation by foreign governments, which requires the Company to
follow certification procedures for some countries. Failure to obtain necessary
local country approvals or certifications will restrict Davox's ability to sell
into some countries. International product revenue was $4.5 million, $3.3
million and $4.5 million in 1995, 1994 and 1993 respectively.
SUPPORT AND SERVICE
Davox's Customer Service Organization provides maintenance and systems
integration services that include not only call center system installation and
training, but also:
. Network planning, design, and implementation services, and
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. Professional services that include call center consulting, custom
application design, and development services.
Davox customer support comprises:
. Support teams responsible for on-going account management and customer
satisfaction of the installed base,
. On-site hardware and software support,
. A Worldwide Support Center located in the corporate offices in Westford,
Massachusetts that provides centralized access to hardware and software
support as required on a worldwide basis to end-users and distributors,
. Software services that enhance or modify current systems, and
. Professional services that deliver consulting and customized project
services as required.
Under the terms of an agreement with Grumman Systems Support Corporation
(GSSC) of Bohemia, New York, GSSC delivers hardware support services for the
Unison(R) system and older CAS(R) and SMC(R) product lines within the
continental United States and Canada while Davox continues to deliver software
support services. In addition, GSSC provides network design and systems
integration services allowing Davox to focus its expertise on customizing
advanced calling centers for its clients.
Through its Continuum(R) customer support program, Davox offers several
support options from which Unison(R) system customers can choose. Services range
from customer participation in the repair and software upgrade process, to full
hardware and software support by Davox.
Customer service revenues accounted for $14,174,000, or 37.7% of the
Company's total revenue in 1995, an increase in revenue from $13,078,000, or
43.5% of the Company's revenue in 1994, and an increase from $12,857,000, or
38.1% of revenue in 1993. Customer service revenues as a percentage of total
revenues decreased in 1995 as compared to 1994 due largely to the higher product
revenues in 1995.
RESEARCH, DEVELOPMENT AND ENGINEERING
The Company employs an open system, client/server, relational database
approach in developing its unified call center solutions. The platform selected
for this approach is the SPARC Station from SUN Microsystems Inc.. The Company's
development efforts are focused on enhancing and expanding the functionality of
these systems while reducing their cost. Davox currently anticipates that areas
of potential product development may include integration links to additional
call center telephony components and the development of additional telephone
management and reporting capabilities.
The Company's continued success depends on, among other factors,
maintaining close working relationships with its customers and resellers, and
anticipating and responding to their evolving applications needs. The Company is
committed to the development of new products, the improvement of existing
products and the continuing evaluation of new technologies.
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During 1995, 1994 and 1993 the Company's research, development and
engineering costs were approximately $4,020,000, $3,540,000 and $3,391,000,
respectively, representing approximately 10.7%, 11.8% and 10.1%, respectively of
total revenues during these periods. In the future, the Company expects to incur
approximately the same level of research, development and engineering
expenditures as it did during 1995. In addition, the Company did not capitalize
any of it's software development costs in 1995, while it spent approximately
$310,000 and $784,000 on capitalized software development costs during 1994 and
1993, respectively.
OPERATIONS
While the majority of the Company's hardware needs are met by readily
available off-the-shelf technology, a small portion remains proprietary. These
proprietary hardware components are manufactured by third party contractors, and
the Company believes there are many qualified vendors for these services. The
Company's production process consists primarily of final test, quality
assurance, and systems integration which occurs at its Westford facility. The
Company purchases certain equipment for Unison(R) through an industry remarketer
agreement with SUN Microsystems.
The Company attempts to maintain multiple sources of supply for key items
and believes it has adequate sources of supply for its expected needs. While any
of these sources could be replaced if necessary, the Company might face
significant delays in establishing replacement sources or in modifying its
products to incorporate replacement components or software code. There can be no
assurance that the Company will not suffer delays resulting from non-performance
by its vendors or cost increases due to a variety of factors, including
component shortages or changes in laws or tariffs applicable to items imported
by the Company.
COMPETITION
Davox systems compete against various outbound calling systems. Companies
such as Digital Systems International, Inc., Melita International Corporation
and EIS International, Inc. offer predictive dialers, but with varying levels of
functionality in terms of system management, integration and workstation
support.
Certain of the Company's potential competitors may be large companies which
have greater financial, technical and marketing resources. It is possible that
competitors could produce products that perform the same or similar functions as
those performed by the Company's products.
The Company believes that the principal factors affecting competition are
ease of use and range of functionality, reliability, performance, price and
customer service, and that the Company competes favorably as to these factors.
RELIANCE ON INTELLECTUAL PROPERTY
The Company relies on a combination of patent, copyright, contract and
trade secret laws to establish and protect its proprietary rights in its
technology. Software products are furnished under software license agreements
which grant customers licenses to use, rather than to own, the products. The
license agreements contain provisions protecting the Company's
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ownership of the underlying technology. Upon commencement of employment,
employees execute an agreement under which inventions developed during the
course of employment will, at the election of the Company, be assigned to the
Company, and which further prohibits disclosure of confidential Company
information. Despite the precautions undertaken by the Company, it may be
possible to copy or otherwise obtain and use the Company's products or
technology without authorization. In addition, effective protection of
intellectual property rights may be limited or unavailable in certain foreign
countries.
The Company owns and licenses a number of patents relating to predictive
dialing, real time telecommunication management and user interfaces. Davox is
very active in pursuing patents in its key technology and applications areas.
The Company does not rely on the licensed patents as its sole competitive
advantage.
EMPLOYEES
As of December 31, 1995, the Company had 164 full-time employees, of whom
18 were engaged in operations, 102 in sales, marketing and customer support, 27
in research, development and engineering and 17 in general and administrative
functions. The Company's ability to attract and retain qualified personnel is
essential to its continued success. None of the Company's employees is
represented by a collective bargaining agreement, nor has the Company ever
experienced any work stoppage. The Company believes that its employee relations
are good.
ITEM 2 PROPERTIES
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During January 1994, the Company moved its administrative offices and its
operations and development facilities to a 60,000 square foot, two story
building in Westford, Massachusetts. The facility is occupied under a lease
which expires in September 1997. The Company incurred approximately $480,000
for various expenditures related to this move, of which $190,000 represents
property under a capital lease. In addition, the Company leases facilities for
district and regional sales and service offices in eight states. The current
aggregate annual rental payments for all of the Company's facilities are
approximately $551,000.
ITEM 3 LEGAL PROCEEDINGS
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The Company is from time to time subject to claims arising in the ordinary
course of business. While the outcome of the claims cannot be predicted with
certainty, management does not expect these matters to have a material adverse
effect on the results of operations and financial condition of the Company.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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There were no matters submitted to a vote of security holders during the
last quarter of the fiscal year ended December 31, 1995.
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ITEM 4A EXECUTIVE OFFICERS OF THE REGISTRANT
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The executive officers of the Company, the age of each, and the period
during which each has served in his present office are as follows:
MR. ALPHONSE M. LUCCHESE (60) has served as Chairman, President and Chief
Executive Officer since July 1994. Mr. Lucchese joined Davox following seven
years as President and Chief Executive Officer at Iris Graphics, Inc., a
manufacturer of quality color printers. Prior to joining Iris, Mr. Lucchese had
served as Vice President of Sales at Xyvision, Inc., a manufacturer of computer-
integrated publishing systems sold to Fortune 500 companies, commercial printers
and typesetters, and government agencies. Mr. Lucchese was Vice President of
Sales for Davox Corporation from 1983 until 1984. Earlier, he had spent six
years at Raytheon Data Systems, where he attained the position of Vice President
and General Manager of Northeastern Operations. Following service in the U.S.
Army during the mid-1950's, Mr. Lucchese began his professional career at IBM as
a systems engineer, later moving into the position of marketing representative.
MR. JOHN J. CONNOLLY (39) has served as Vice President, Finance and Chief
Financial Officer since August 1, 1994. Mr. Connolly joined Davox from Iris
Graphics where he had been Vice President of Finance since 1989. Prior to
joining Iris, Mr. Connolly held finance and accounting positions of increasing
responsibilities at Instrumentation Laboratory, a manufacturer of medical
equipment.
MR. JAMES F. MITCHELL (49) is a founder of the Company and has served as Senior
Vice President and Chief Technical Officer since 1983. From September 1993 to
August 1994, Mr. Mitchell managed the domestic sales operations. From 1981 to
1983, he was Vice President, Engineering of the Company. Prior to joining Davox
in 1981, Mr. Mitchell served as Manager of Systems Development at Applicon,
Inc., a producer of CAD/CAM products.
MR. DOUGLAS W. SMITH (53) has served as served as Vice President, Sales and
Marketing since September 1, 1994. Mr. Smith is responsible for the company's
worldwide direct and reseller sales, as well as product and industry marketing,
sales support and marketing communications. Mr. Smith joined Davox following
seven years at Iris Graphics. Prior to joining Iris, Mr. Smith worked for
nearly 20 years in sales, managerial, and executive-level capacities for General
Electric Information Systems, Honeywell Information Systems, Raytheon Data
Systems, and Phoenix Data Systems.
MR. MARK DONOVAN (41) has served as Vice President, Operations since August
1994. Since joining Davox in 1983, Mr. Donovan has held management positions of
increasing responsibility, including Vice President, Customer Service. He has
also held various materials and manufacturing management positions within the
company. Prior to joining Davox, Mr. Donovan held various management positions
with Applicon, Inc. and Raytheon Corporation.
MR. JOHN E. CAMBRAY (40) has served as Vice President, Product Development since
August 1993. Mr. Cambray has been with Davox since early 1982 and has held
various software development and engineering management positions during this
time. Prior to joining Davox, Mr. Cambray held various design and management
positions with FASFAX Corporation and Sanders Associates.
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ITEM 4A EXECUTIVE OFFICERS OF THE REGISTRANT (CONTINUED)
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MR. EDWARD D. KAY (53) has served as Vice President, Customer Service since
1994. Mr. Kay joined Davox in 1992 and held the position of Director of
Technical Sales Support until he was named Vice President, Customer Service.
Prior to joining Davox, Mr. Kay was European Customer Service Manager for
Silicon Graphics in Neuchatel, Switzerland. Mr. Kay has also held customer
service and program management positions at Codex Corporation and Digital
Equipment Corporation.
MR. PHILIP D. TOLMAN (42) joined the Company in December 1990 and has served as
Treasurer since 1992. Mr. Tolman is also an attorney admitted to the bar in
Massachusetts, and serves as In-house counsel on general commercial
transactional matters. Prior to joining Davox, Mr. Tolman held various
financial, administrative and planning management positions with Prime Computer,
Inc., with his last assignment being as Director, Business Planning.
Officers are elected by and serve at the discretion of the Board of Directors.
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PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- --------------------------------------------------------------------------------
Davox's Common Stock has been traded on the NASDAQ stock market under the symbol
"DAVX" since its initial public offering on April 28, 1987. Prior to that date
there was no public market for Davox's Common Stock. The following table sets
forth the range of high and low sale prices per share of Common Stock on the
National Market System for each quarter of the years ended December 31, 1995 and
1994 as reported by the National Association of Securities Dealers Automated
Quotation System (NASDAQ).
<TABLE>
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Fiscal 1995 High Low
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<S> <C> <C>
First Quarter 8 5-3/8
Second Quarter 9-1/8 6-7/8
Third Quarter 13-1/4 8-7/8
Fourth Quarter 12-7/8 10
<CAPTION>
Fiscal 1994 High Low
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<S> <C> <C>
First Quarter 5-1/4 3-3/4
Second Quarter 3-3/4 2-3/8
Third Quarter 4-1/2 2
Fourth Quarter 5-5/8 3-7/8
</TABLE>
As of February 7, 1996, there were approximately 360 holders of record of the
Company's Common Stock and approximately 700 beneficial shareholders of the
Company's Common Stock.
The Company has never paid cash dividends on its Common Stock and has no present
intentions to pay cash dividends in the future. The Company intends to retain
any future earnings to finance the growth of the Company.
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ITEM 6 SELECTED FINANCIAL DATA
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The following table sets forth certain financial data with respect to the
Company for each of the five years in the period ended December 31, 1995:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(In Thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Statements of Operations Data:
Total revenues.................... $37,556 $30,047 $33,756 $30,636 $32,478
Cost of revenues.................. 16,451 16,234 17,488 18,208 17,849
----------- ----------- ----------- ----------- -----------
Gross profit...................... 21,105 13,813 16,268 12,428 14,629
Research, development and
engineering expenses............ 4,020 3,540 3,391 3,389 2,977
Selling, general and
administrative expenses......... 12,166 12,681 12,472 12,485 13,934
Write down of intangible assets
and restructuring costs ........ - - - - 3,379 - - - - - - - - 5,250
----------- ----------- ----------- ----------- -----------
Income (loss) from operations..... 4,919 (5,787) 405 (3,446) (7,532)
Interest income (expense), net.... 421 37 20 (35) (14)
----------- ----------- ----------- ----------- -----------
Income (loss) before provision
for income taxes 5,340 (5,750) 425 (3,481) (7,546)
Provision for income taxes 534 - - - - 40 - - - - - - - -
----------- ----------- ----------- ----------- -----------
Net income (loss).................... $4,806 ($5,750) $385 ($3,481) ($7,546)
=========== =========== =========== =========== ===========
Net income (loss) per common and
common equivalent share............ $.62 ($1.01) $0.07 ($.66) ($1.44)
=========== =========== =========== =========== ===========
Weighted average number of common
and common equivalent shares
outstanding...................... 7,711 5,689 5,776 5,256 5,239
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital................... $8,589 $1,807 $3,627 $2,572 $5,618
Total assets...................... 20,825 14,777 17,681 16,049 20,854
Long-term debt.................... 45 138 96 50 456
Stockholders' equity.............. 10,912 5,492 8,881 8,340 11,821
</TABLE>
14
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- ---------------------------------------------------------------------
AND RESULTS OF OPERATIONS
- -------------------------
The following table sets forth, for the periods indicated, the percentage of
revenues represented by items as shown in the Company's statement of operations.
This table should be read in conjunction with the Selected Financial Data,
Consolidated Financial Statements and Notes to Consolidated Financial Statements
contained elsewhere herein.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
YEAR ENDED DECEMBER 31,
- --------------------------------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Product revenue 62.3 % 56.5 % 61.9 %
Service revenue 37.7 43.5 38.1
- --------------------------------------------------------------------------------
Total revenues 100.0 100.0 100.0
Cost of revenues 43.8 54.0 51.8
- --------------------------------------------------------------------------------
Gross profit 56.2 46.0 48.2
Research, development
and engineering expenses 10.7 11.8 10.1
Selling, general and
administrative expenses 32.4 42.2 36.9
Restructuring costs - - - - 11.2 - - - -
- --------------------------------------------------------------------------------
Income (loss) from
operations 13.1 (19.2) 1.2
Interest income
(expense) net 1.1 0.1 - - - -
- --------------------------------------------------------------------------------
Income (loss) before provision
for income taxes 14.2 (19.1) 1.2
Provision for income taxes 1.4 - - - - 0.1
- --------------------------------------------------------------------------------
Net income (loss) 12.8 % (19.1 %) 1.1 %
- --------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Total revenues were approximately $37,556,000, $30,047,000, and $33,756,000
in the fiscal years ended December 31, 1995, 1994 and 1993, respectively. Total
revenues increased 25.0% for the year ended December 31, 1995 compared to the
same period in 1994 and decreased 11.0% for fiscal year 1994 compared to fiscal
year 1993. Total cost of revenues as a percentage of total revenues was 43.8% in
fiscal year 1995, 54.0% in fiscal year 1994, and 51.8% in fiscal year 1993.
Product revenue was approximately $23,382,000, $16,969,000, and $20,899,000
in fiscal years 1995, 1994 and 1993, respectively. Product revenue increased by
37.8% from 1994 to 1995 and decreased by 18.8% from 1993 to 1994. The increase
in 1995 was mainly attributable to strong demand for our core collections call
center products, sales of the new telemarketing product, and expansion in
international markets. The decrease in 1994 was mainly attributable to lower
international revenues and declining workstation and autodialer revenues.
Product cost of revenues as a percentage of product revenues was 30.6%,
39.6%, and 41.0% in fiscal years 1995, 1994 and 1993, respectively. In 1995, the
continued improvements in product margin represent the favorable impact of
increased volume as well as reduced costs related to inventory provisions and
amortization. The increase in product margin in 1994 was attributable to a shift
to higher margin software products associated with the Unison(R) product line,
but was offset by provisions for inventory valuation and amortization of the
Company's capitalized software costs also related to the Unison(R) product.
Service revenue was approximately $14,174,000, $13,078,000, and $12,857,000
in fiscal years 1995, 1994 and 1993, respectively. Service revenue increased by
8.4% from 1994 to 1995 and by 1.7% from 1993 to 1994. The increases in 1995 and
1994 were due to an increase in installation and maintenance revenues resulting
from the growth in the number of the Company's customers.
Service cost of revenues as a percentage of service revenues was 65.6%,
72.8%, and 69.3% in 1995, 1994 and 1993, respectively. The decrease in 1995 is
primarily related to the increase in revenue, while also being favorably
impacted by slightly reduced third-party maintenance costs. The increase in
service costs in 1994 was attributable to increased third-party maintenance
costs which the Company had expected to offset by reducing its service
operations. This reduction did not occur, however, because the Company, in
connection with its introduction of the Unison(R) product, was required to
increase support services in order to address these additional service needs.
Revenues from the Company's largest single customers were 12%, 9%, and 12%
of total revenues in 1995, 1994 and 1993, respectively. Revenues from the
Company's three largest customers amounted to 20%, 19%, and 30% of total
revenues in 1995, 1994 and 1993, respectively. One of the three largest
customers in 1993 was one of the Company's international distributors, not a
single end user customer. The Company intends to broaden its base of existing
and new customers by penetrating new markets, expanding it's direct
16
<PAGE>
international sales force, and using alternate channels of distribution, thereby
decreasing its dependence on its largest customers.
Research, development and engineering expenses were approximately
$4,020,000, $3,540,000, and $3,391,000, representing 10.7%, 11.8%, and 10.1% of
total revenues during 1995, 1994 and 1993, respectively. In addition, due to a
change in the Company's current development cycle; no software development costs
were capitalized in 1995, while the Company spent approximately $310,000 and
$784,000 on capitalized software development costs during 1994 and 1993,
respectively. The decrease in capitalized development costs from 1993 to 1994
was related to software development on Unison(R), which was completed in
September of 1993.
Selling, general and administrative expenses were approximately
$12,165,000, $12,681,000, and $12,472,000, representing 32.4%, 42.2%, and 36.9%
of total revenues during 1995, 1994, and 1993, respectively. The decrease in
1995 was mostly attributable to the significant increase in revenues. The
increase in 1994 as compared to 1993 was attributable to documentation,
advertising, and certification expense related to the Unison(R) product, higher
personnel costs including benefits, and indirect selling expenses. These
increases were partially offset by a decrease in legal fees related to the
settlement of a patent dispute with Digital Systems International in 1994.
Interest income, derived primarily from money market investments, increased
by 559.2% from 1994 to 1995 and by 63.8% from 1993 to 1994. These increases were
due to the significantly higher average cash balances from year to year.
Interest expense decreased by 35.5% from 1994 to 1995. This decrease reflects an
overall decrease in outstanding debt attributable to capital lease obligations.
Interest expense increased 47.1% from 1993 to 1994. This increase reflected
additional interest expense on capital lease obligations related to the new
Westford facility.
RESTRUCTURING
In the second quarter of 1994, in response to lower revenue, the Company
implemented a restructuring program. The restructuring was intended to refocus
the strategic direction of the Company to exploit the full potential of the
Unison(R) product line and maintain the Company's operating expenses in line
with the revised revenue plan. As result of this program, the Company hired a
new Chief Executive Officer and new Chief Financial Officer. This restructuring
resulted in a 21% reduction in the Company's work force worldwide.
The Company offered or was contractually committed to severance packages of
up to fifteen months' salary. Additionally, the Company accelerated the phaseout
of certain older product lines, necessitating the write-down of certain assets.
In total, the restructuring cost was approximately $3,379,000, of which
approximately $82,000 of other costs have yet to be paid as of December 31,
1995. The restructuring charge reflects approximately $1,487,000 of severance
related costs and $1,892,000 related to the phase out of certain older product
lines.
17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1995, the Company's principal sources of liquidity were
its cash and cash equivalent balances of approximately $12,936,000. As of the
end of fiscal 1994, the Company's cash and cash equivalent balances were
approximately $5,278,000. The increase in cash is a result of the Company's
operating results and an increase in customer deposits. During the fourth
quarter of 1994, the Company entered into an agreement for a secured, working
capital line of credit with a bank for up to $2,000,000 based on eligible
receivables, as defined. There were no outstanding balances as of December 31,
1995 or 1994.
Working capital as of December 31, 1995 was approximately $8,589,000 as
compared to $1,807,000 as of December 31, 1994 and $3,627,000 as of December 31,
1993. Total assets as of December 31, 1995 were approximately $20,825,000
compared to $14,777,000 as of December 31, 1994 and $17,681,000 as of December
31, 1993. The increase from 1994 to 1995 was primarily attributable to the cash
generated by operations.
Management believes, based on the current operating plan, that the
Company's existing cash and cash equivalents, cash generated from operations,
and amounts available under its secured, working capital line of credit will be
sufficient to meet the Company's cash requirements for the foreseeable future.
IMPACT OF INFLATION
The Company believes that inflation did not have a material effect on the
results of operations in 1995.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
From time to time, information provided by the Company, statements made by
its employees or information included in its filings with the Securities and
Exchange Commission (including this Form 10-K) may contain statements which are
not historical facts, so-called "forward-looking statements," which involve
risks and uncertainties. In particular, statements in "Item 1. Business"
relating to expansion of the Business Partners Program, and in "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" relating to the Company's intent to broaden its customer base and
decrease reliance on its largest customers and the sufficiency of working
capital, may be forward-looking statements. The Company's actual future results
may differ significantly from those stated in any forward-looking statements.
Factors that may cause such differences include, but are not limited to, the
factors discussed below. Each of these factors, and others, are discussed from
time to time in the Company's filings with the Securities and Exchange
Commission.
The Company's future results may be subject to substantial risks and
uncertainties. The Company purchases certain equipment for its products from
third party suppliers and licenses certain components of its software code from
a number of third party vendors. While the Company believes that third party
equipment and software vendors could be replaced if necessary, the Company might
face significant delays in establishing replacement sources or in modifying its
products to incorporate replacement components or software code. There can be
no assurance that the Company will not suffer delays resulting from non-
performance by its
18
<PAGE>
vendors or cost increases due to a variety of factors, including component
shortages or changes in laws or tariffs applicable to items imported by the
Company. Also, the Company relies on certain intellectual property protections
to preserve its intellectual property rights. Any invalidation of the Company's
intellectual property rights or lengthy and expensive defense of those rights
could have a material adverse affect on the Company. The development of new
products, the improvement of existing products and the continuing evaluation of
new technologies is critical to the Company's success. Successful product
development and introduction depends upon a number of factors, including
anticipating and responding to the evolving applications needs of customers and
resellers, timely completion and introduction of new products, and market
acceptance of the Company's products. The telecommunications industry is
extremely competitive. Certain current and potential competitors of the Company
are more established, benefit from greater market recognition and have
substantially greater financial, development and marketing resources than the
Company.
The Company's quarterly and annual operating results are affected by a wide
variety of factors that could materially adversely affect revenues and
profitability, including: the timing of customer orders; the Company's ability
to introduce new products on a timely basis; introduction of products and
technologies by the Company's competitors; and market acceptance of the
Company's and its competitors' products. As a result of the foregoing and other
factors, the Company may experience material fluctuations in future operating
results on a quarterly or annual basis which could materially and adversely
affect its business, financial condition, operating results and stock price.
19
<PAGE>
ITEM 8 CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ---------------------------------------------------------------
Index to Consolidated Financial Statements
- ------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants 21
Consolidated Balance Sheets as of December 31,
1995 and 1994 22
Consolidated Statements of Operations for the Years
Ended December 31, 1995, 1994, and 1993 23
Consolidated Statements of Stockholder's Equity
for the Years Ended December 31, 1995, 1994
and 1993 24
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1995, 1994 and 1993 25
Notes to Consolidated Financial Statements 26
Financial Statement Schedule 38
</TABLE>
20
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Davox Corporation:
We have audited the accompanying consolidated balance sheets of Davox
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1995
and 1994, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Davox Corporation and
subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 22, 1996
21
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
----------------- ----------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 12,935,907 $ 5,277,780
Accounts receivable, net of reserves of
$665,030 in 1995 and $637,672 in 1994 4,459,597 4,699,719
Inventories 1,009,029 767,794
Prepaid expenses and other current assets 52,357 209,020
----------------- ----------------
Total current assets 18,456,890 10,954,313
Property and equipment, net 1,865,398 2,536,759
Capitalized software development costs, net 380,287 958,910
Other assets, net 121,987 327,135
----------------- ----------------
$20,824,562 $14,777,117
================= ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 92,896 $ 108,459
Accounts payable 2,927,172 2,530,656
Accrued expenses 3,926,054 3,819,782
Customer deposits 1,292,627 830,295
Deferred revenue 1,629,081 1,858,241
----------------- ----------------
Total current liabilities 9,867,830 9,147,433
----------------- ----------------
Long-term debt, net of current maturities 44,891 137,788
----------------- ----------------
Commitments and contingencies (Notes 7 and 8)
Stockholders' equity:
Common stock, $.10 par value -
Authorized - 10,000,000 shares
Issued - 6,845,789 shares in 1995
and 6,580,295 shares in 1994 684,579 658,030
Capital in excess of par value 42,509,154 41,922,005
Accumulated deficit (32,257,746) (37,063,993)
----------------- ----------------
10,935,987 5,516,042
Less - treasury stock, 2,807 shares at cost (24,146) (24,146)
----------------- ----------------
Total stockholders' equity 10,911,841 5,491,896
----------------- ----------------
$20,824,562 $14,777,117
================= ================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
22
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Product revenue $23,382,089 $16,969,126 $20,899,485
Service revenue 14,173,982 13,077,995 12,856,746
---------------- -------------- -------------
Total revenues 37,556,071 30,047,121 33,756,231
---------------- -------------- -------------
Cost of product revenue 7,155,766 6,715,886 8,575,944
Cost of service revenue 9,295,707 9,518,484 8,912,698
---------------- -------------- -------------
Total cost of revenues 16,451,473 16,234,370 17,488,642
---------------- -------------- -------------
Gross profit 21,104,598 13,812,751 16,267,589
---------------- -------------- -------------
Research, development and engineering expenses 4,020,350 3,539,858 3,390,955
Selling, general and administrative expenses 12,165,447 12,680,787 12,471,944
Restructuring costs - - - 3,379,031 - - -
---------------- -------------- -------------
Total operating expenses 16,185,797 19,599,676 15,862,899
---------------- -------------- -------------
Income (loss) from operations 4,918,801 (5,786,925) 404,690
Interest income 440,909 66,882 40,839
Interest expense 19,287 29,913 20,339
---------------- -------------- -------------
Income (loss) before provision
for income taxes 5,340,423 (5,749,956) 425,190
Provision for income taxes 534,176 - - - 40,000
---------------- -------------- -------------
Net income (loss) $4,806,247 ($5,749,956) $385,190
================ ============== =============
Net income (loss) per common and
common equivalent share $0.62 ($1.01) $0.07
================ ============== =============
Weighted average number of common and
common equivalent shares outstanding 7,710,553 5,688,730 5,775,975
================ ============== =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
23
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Capital in Total
Common Stock Excess of Accumulated Treasury Stock Stockholders'
------------------------- -------------------
Shares Amount Par Value Deficit Shares Amount Equity
------------ ---------- ------------- ------------- --------- --------- -----------
------------ ---------- ------------- ------------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992 5,256,378 525,638 39,537,802 (31,699,227) (2,807) (24,146) 8,340,067
Proceeds from exercise of stock
options 71,878 7,188 140,194 - - - - - - - - - - - - 147,382
Proceeds from employee stock
purchase plan 4,274 427 7,660 - - - - - - - - - - - - 8,087
Net income - - - - - - - - - - - - 385,190 - - - - - - - - 385,190
------------ ---------- ------------- ------------- --------- --------- -----------
BALANCE, December 31, 1993 5,332,530 533,253 39,685,656 (31,314,037) (2,807) (24,146) 8,880,726
Proceeds from exercise of stock
options 175,167 17,517 325,333 - - - - - - - - - - - - 342,850
Proceeds from employee stock
purchase plan 5,932 593 17,684 - - - - - - - - - - - - 18,277
Proceeds from private placement 1,066,666 106,667 1,893,332 - - - - - - - - - - - - 1,999,999
Net loss - - - - - - - - - - - - (5,749,956) (5,749,956)
------------ ---------- ------------- ------------- --------- --------- -----------
BALANCE, December 31, 1994 6,580,295 $658,030 $41,922,005 ($37,063,993) (2,807) ($24,146) $5,491,896
Proceeds from exercise of stock
options including related tax benefit 256,758 25,676 551,927 - - - - - - - - - - - - 577,603
Proceeds from employee stock
purchase plan 8,736 873 35,222 - - - - - - - - - - - - 36,095
Net income - - - - - - - - - - - - 4,806,247 4,806,247
------------ ---------- ------------- ------------- --------- --------- -----------
BALANCE, December 31, 1995 6,845,789 $684,579 $42,509,154 ($32,257,746) (2,807) ($24,146) 10,911,841
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
24
<PAGE>
DAVOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
Cash flows from operating activities: 1995 1994 1993
----------------- -------------- -----------------
<S> <C> <C> <C>
Net income (loss) $4,806,247 ($5,749,956) $385,190
Adjustments to reconcile net income (loss) to net cash
provided in operating activities -
Depreciation and amortization 2,643,814 3,138,413 3,025,823
Restructuring costs (518,617) 600,933 - - -
Provision for losses on accounts receivable 248,561 338,289 357,294
Changes in assets and liabilities -
Accounts receivable (8,439) 2,473,593 (1,946,640)
Inventories (241,235) 1,233,663 (156,936)
Prepaid expenses 156,663 (109,296) 162,680
Accounts payable 396,516 (836,149) 411,305
Accrued expenses 624,889 101,302 739,809
Customer deposits 462,332 719,730 110,565
Deferred revenue (229,160) (154,026) 276,337
----------------- -------------- -----------------
Net cash provided by operating activities 8,341,571 1,756,496 3,365,427
----------------- -------------- -----------------
Cash flows from investing activities:
Purchase of property and equipment (1,230,140) (1,067,223) (1,493,883)
Increase (decrease) in other assets 41,458 (43,332) (125,347)
Capitalized software development costs - - - (309,961) (784,320)
----------------- -------------- -----------------
Net cash used in investing activities (1,188,682) (1,420,516) (2,403,550)
----------------- -------------- -----------------
Cash flows from financing activities:
Principal payments for long-term debt (108,460) (137,575) (600,454)
Proceeds from private placement - - - 1,999,999 - - -
Proceeds from exercise of stock options including related tax 577,603 342,850 147,382
benefit
Proceeds from exercise of employee stock purchase plan 36,095 18,277 8,087
----------------- -------------- -----------------
Net cash provided by (used in) financing activities 505,238 2,223,551 (444,985)
----------------- -------------- -----------------
Net increase in cash and cash equivalents 7,658,127 2,559,531 516,892
Cash and cash equivalents at beginning of year 5,277,780 2,718,249 2,201,357
----------------- -------------- -----------------
Cash and cash equivalents at end of year $12,935,907 $5,277,780 $2,718,249
================= ============== =================
Supplemental disclosures of cash flow information:
Cash paid for-
Interest $ 19,287 $ 29,913 $ 23,566
================= ============== =================
Income taxes $ 184,655 $ 20,826 $ 24,028
================= ============== =================
Other transactions not affecting cash:
Acquisition of property and equipment under
capital lease obligation $ - $ 190,812 $ 153,212
================= ============== =================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
25
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(1) Operations and Significant Accounting Policies
Davox Corporation (the Company) is a software and systems integration
company which develops, markets, supports and services management systems for
call center operations. These systems are marketed directly, through joint
marketing relationships, and distribution agreements. The Company provides its
systems to banks, consumer finance organizations, retailers, entertainment
companies, telemarketing organizations, and utilities.
These consolidated financial statements reflect the application of certain
significant accounting policies, as described below and elsewhere in the
accompanying consolidated financial statements.
(a) Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(b) Revenue Recognition
The Company recognizes revenue when products are shipped, provided that no
significant vendor obligations remain outstanding, and the collection of the
resulting receivable is deemed probable. The Company's policy is to defer the
revenue associated with any significant vendor obligations remaining at the time
of shipment until the related services are satisfied.
Service revenues are recognized when the services are performed. Support
revenues are recognized ratably over the period to which they relate.
(c) Warranty Costs
The Company warrantees its products for 90 days and provides for estimated
warranty costs upon shipment of such products. Warranty costs have not been and
are not anticipated to be significant.
26
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Continued)
(1) Operations and Significant Accounting Policies (Continued)
(d) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
(e) Postretirement Benefits
The Company has no obligations for postretirement or general postemployment
benefits.
(f) Cash and Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less at the time of acquisition to be cash
equivalents.
In 1994, the Company adopted Statement of Financial Accounting Standard
(SFAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities, effective July 1, 1994. The adoption of SFAS No. 115 did not have a
material effect on the Company's financial statements.
(g) Inventories
Inventories are stated at the lower of first-in, first out (FIFO) cost or
market and consist of the following:
<TABLE>
<CAPTION>
December 31,
---------------------------------
1995 1994
---- ----
<S> <C> <C>
Raw materials and subassemblies.. $ 52,032 $ 59,916
Work-in-process.................. 641,430 503,505
Finished goods................... 315,567 204,373
------------ ----------
$ 1,009,029 $ 767,794
============ ==========
</TABLE>
Subassemblies, work-in-process and finished goods inventories include
material, and sub-contract labor. Internal labor and overhead are not
significant.
27
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Continued)
(1) Operations and Significant Accounting Policies (Continued)
(h) Property and Equipment
The Company provides for depreciation and amortization of property and
equipment using the straight-line and declining-balance methods by charges to
operations in amounts to allocate the cost of the property and equipment over
their estimated useful lives. The cost of property and equipment and their
useful lives are summarized as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------
Useful Life 1995 1994
----------- ---- ----
<S> <C> <C> <C>
Machinery and equipment........ 2-3 Years $ 3,564,708 $ 5,687,112
Equipment under capital lease.. Life of Lease 530,117 530,117
Rental and demonstration
equipment.................. 3 Years 411,604 436,162
Service equipment.............. 1-5 Years 2,158,185 2,153,522
Leasehold improvements......... Life of Lease 95,155 80,110
------------ ------------
$ 6,759,769 $ 8,887,023
Less-Accumulated depreciation
and amortization........... 4,894,371 6,350,264
------------ ------------
$ 1,865,398 $ 2,536,759
============ ============
</TABLE>
(i) Research and Development and Software Development Costs
Research and development expenses other than software development costs are
charged to operations as incurred. In compliance with SFAS No. 86, Accounting
for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed,
certain computer software development costs are capitalized in the accompanying
consolidated balance sheets. A change has occurred in the Company's current
development cycle, such that the period between the attainment of technological
feasibility and the first commercial shipment of a software enhancement has
shortened, and the level of capitalizable costs incurred are no longer material.
Accordingly, there were no software development costs capitalized during the
year ended December 31, 1995. Approximately $310,000 and $784,000 of software
costs were capitalized during the years ended December 31, 1994 and 1993,
respectively. The Company
28
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Continued)
(l) Operations and Significant Accounting Policies (Continued)
(I) Research and Development and Software Development Costs (continued)
amortizes capitalized software development costs over the resulting products'
estimated useful lives of 12 to 36 months beginning with the first shipment of
the related product. Approximately $579,000, $685,000, and $614,000 of
capitalized software development costs were amortized to expense during the
years ended December 31, 1995, 1994 and 1993, respectively.
(j) Net Income (Loss) per Common and Common Equivalent Share
Net income per common and common equivalent share has been computed using
the weighted average number of common and common equivalent shares outstanding
during each period. Common stock and common stock issuable pursuant to stock
options and warrants have been reflected as outstanding using the treasury stock
method. Common equivalent shares (stock options and warrants) have not been
considered in the calculation of net loss per share for the year ended December
31, 1994, as their effect would be antidilutive. Fully diluted net income per
common and common equivalent share has not been separately presented as the
amounts are not materially different from primary net income per share.
(k) Recently Issued Accounting Standards
During March 1995, the Financial Accounting Standards Board (FASB) issued
SFAS No. 121, Accounting for the Impairment of Long Lived Assets, which is
effective for fiscal years beginning after December 15, 1995. The Company does
not expect the adoption of these standards to have a material effect on its
financial position or results of operations.
(2) Line of Credit
The Company has a secured working capital line of credit (line of credit)
with a bank which expires in June 1996, pursuant to which the Company may borrow
up to the lesser of $2,000,000 or a percentage of accounts receivable, as
defined. Borrowings under the line of credit, will bear interest at the bank's
prime rate (8.5% at December 31, 1995) plus 1%. The line of credit is
collateralized by a first lien on all corporate assets including intellectual
property. There were no borrowings under the line of credit during 1995.
29
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Continued)
(3) Accrued Expenses
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31,
------------------------
1995 1994
---- ----
<S> <C> <C>
Commissions and bonuses..................... $ 653,936 $ 452,480
Employee benefits........................... 964,717 569,583
State sales tax............................. 302,888 624,646
Other....................................... 2,004,513 2,173,073
----------- -----------
$ 3,926,054 $ 3,819,782
=========== ===========
</TABLE>
(4) Long-term debt
Long-term debt consists of capital lease purchase obligations at interest
rates ranging from 9.8% to 13.15%, collateralized by certain equipment. Total
debt was $137,787 and $246,247 with current maturities of $92,896 and $108,459,
and long term debt of $44,891 and $137,788 for the years ended December 31, 1995
and 1994, respectively.
(5) Employee Benefit Plan
The Company maintains an Employee Deferred Compensation Savings Plan that
covers all employees over 21 years of age who have completed at least six months
of service with the Company. Contributions by the Company are discretionary and
are determined by the Company's Board of Directors. There were no Company
contributions in 1995, 1994 or 1993.
(6) Income Taxes
The Company accounts for income taxes under the liability method in
accordance with SFAS No. 109, Accounting for Income Taxes.
30
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Continued)
(6) Income Taxes (Continued)
The approximate income tax effect of each type of temporary difference
comprising the deferred tax asset is approximately as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net operating loss carryforwards.. $ 8,862,000 $10,433,000
Depreciation...................... 604,000 691,000
Federal tax credit carryforwards.. 577,000 577,000
Other, net........................ 1,577,000 1,144,000
------------- ------------
11,620,000 12,845,000
Valuation allowance............... (11,620,000) (12,845,000)
------------- ------------
$ - - - $ - - -
============= ============
</TABLE>
The valuation allowance has been provided to offset the potential deferred
tax assets for which realization is not assured.
At December 31, 1995, the Company has available net operating loss
carryforwards and tax credit carryforwards of approximately $22,154,000 and
$577,000 respectively, expiring through 2009. These carryforwards may be used to
offset future income taxes payable, if any, and are subject to review by the
Internal Revenue Service.
The Internal Revenue Code provides that net operating loss carryforwards
available to be used in any given year may be limited in the event of certain
circumstances, including significant changes in ownership, as defined.
(7) Commitments
(a) Operating Lease Commitments
The Company leases its facilities and sales offices under operating leases
that expire at various dates through May 1999. The Company's lease for its
corporate headquarters expires in September 1997. Pursuant to the lease
agreements, the Company is responsible for maintenance costs and real estate
taxes. Total rental expense for all operating leases for the years ended
December 31, 1995, 1994 and 1993 amounted to approximately $551,000, $684,000
and $1,221,000, respectively.
31
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Continued)
(7) Commitments (Continued)
(a) Operating Lease Commitments (continued)
Future minimum lease payments by year in the aggregate under operating
leases, are approximately as follows at December 31, 1995:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1996...................... $ 381,000
1997...................... 198,000
1998...................... 57,000
1999...................... 18,000
-----------
$ 654,000
===========
</TABLE>
(b) Capital Lease Commitments
The Company leases certain equipment that has been reported as equipment
under capital lease and as lease obligations in the accompanying consolidated
financial statements. The cost and accumulated amortization of this equipment
were approximately $354,000 and $230,000, respectively, at December 31, 1995 and
approximately $530,000 and $291,000, respectively, at December 31, 1994.
Future minimum lease payments under capital leases are as follows at
December 31, 1995:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1996..................................... $ 102,003
1997..................................... 46,782
----------
Total minimum lease payments............. 148,785
Less - amounts representing interest........ (10,998)
----------
Present value of minimum lease payments
on capital lease....................... $ 137,787
==========
Less - current portion ($ 92,896)
-----------
$ 44,891
==========
</TABLE>
32
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Continued)
(c) Employment and Severance Agreements
The Company has entered into employment and severance agreements with
certain officers and employees whereby the Company may be required to pay the
officers and employees a total of approximately $919,000 upon termination of
employment by the Company.
(8) Litigation
The Company is presently engaged in various legal actions and its ultimate
liability, if any, cannot be determined at the present time. However,
management has consulted with legal counsel and management believes that any
such liability will not materially effect the Company's financial position or
results of operations.
(9) Stockholders' Equity
(a) 1986 Stock Option Plan
The Company's 1986 Stock Option Plan (the 1986 Plan) administered by the
Board of Directors, authorizes the issuance of a maximum of 1,114,286 shares of
common stock for the exercise of options in connection with awards or direct
purchases of stock. In August 1994, the Shareholders approved an amendment to
increase the number of shares authorized for issuance under the 1986 Plan to
2,114,286. Options granted under the 1986 Plan may be either nonstatutory stock
options or options intended to constitute "incentive stock options" under the
Internal Revenue Code. Stock options may be granted to employees, officers,
employee-directors or consultants of the Company and are exercisable in such
installments as the Board of Directors may specify. The shares currently vest to
the individual over a four-year period. There were 184,261 shares available for
future grants under the 1986 Plan at December 31, 1995.
In August 1992, the Board of Directors approved an amendment to the Stock
Option Agreements under the 1986 Plan, whereby the options expire 10 years from
date of grant. The Board of Directors also approved an opportunity for the
employees to exchange their existing stock options for new options at the
current fair market value. Included in the options granted and canceled during
the year ended 1992 are 285,217 options exchanged per this action.
33
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Continued)
(9) Stockholders' Equity (Continued)
(b) Stock Options to Directors
The Company's 1988 Non-Employee Director Stock Option Plan (the 1988 Plan),
as amended, is administered by the Board of Directors and authorizes the
issuance of a maximum of 400,000 shares of common stock for the exercise of
options. The 1988 Plan provided for the automatic grant of 40,000 options for
each non-employee director in office at the time of the amendment and provides
for additional grants of 10,000 options per non-employee director on each
biennial anniversary of amendment approval. The 1988 Plan also provides for the
automatic grant of 40,000 options to each newly elected non-employee director
and additional grants of 10,000 options per biennial anniversary of election to
the Board of Directors. Options granted under the 1988 Plan vest 25% per year
beginning one year from the date of grant and expire five years from the date of
grant. There are 247,500 shares available for future grants under the 1988 Plan.
The following is a summary of the stock option activity for all plans for
the years ended December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
Number of Exercise
Options Price Range
------- -----------
<S> <C> <C>
Options outstanding, December 31, 1992 983,114 1.75 - 4.63
Options granted....................... 131,628 2.50 - 5.50
Options exercised..................... (71,878) 1.75 - 2.38
Options canceled...................... (98,928) 1.75 - 4.69
---------- ----------------
Options outstanding, December 31, 1993 943,936 1.75 - 5.50
Options granted........................ 1,475,662 2.25 - 5.25
Options exercised..................... (162,180) 1.75 - 4.50
Options canceled...................... (553,576) 1.75 - 5.50
---------- ----------------
Options outstanding, December 31, 1994 1,703,842 $1.75 - $5.50
Options granted....................... 112,875 6.75 - 12.25
Options exercised..................... (204,640) 1.75 - 7.13
Options canceled...................... (44,519) 1.75 - 12.25
---------- ----------------
Options outstanding, December 31, 1995 1,567,558 $1.75 - $12.25
========== ================
Exercisable, December 31, 1995 546,147 $1.75 - $7.13
========== ================
</TABLE>
34
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Continued)
(9) Stockholders' Equity (Continued)
(c) Employee Stock Purchase Plan
The Company has adopted an Employee Stock Purchase Plan (the "Purchase
Plan"), under which a maximum of 100,000 shares of Common Stock may be purchased
by eligible employees. Substantially all full-time employees of the Company are
eligible to participate in the Purchase Plan.
The Purchase Plan provides for two "purchase periods" within each of the
Company's fiscal years, the first commencing on January 1 of each calendar year
and continuing through June 30 of such calendar year, and the second commencing
on July 1 of each year and continuing through December 31 of such calendar year.
Eligible employees may elect to become participants in the Purchase Plan for a
purchase period by completing a stock purchase agreement prior to the first day
of the purchase period for which the election is made. Shares are purchased
through accumulation of payroll deductions (of not less than 0.5% nor more than
10% of compensation, as defined) for the number of whole shares determined by
dividing the balance in the employee's account on the last day of the purchase
period by the purchase price per share for the stock determined under the
Purchase Plan. The purchase price for the shares will be the lower of 85% of the
fair market value of the Common Stock at the beginning of the purchase period,
or 85% of such value at the end of the purchase period (rounded to the nearest
quarter). During 1995 and 1994, 8,736 and 5,932 shares, respectively were
purchased under the Purchase Plan.
(10) Significant Customers
Revenues from the Company's largest single customers were 12%, 9%, and 12%
of total revenues in 1995, 1994 and 1993, respectively. Revenues from the
Company's three largest customers amounted to 20%, 19%, and 30% of total
revenues in 1995, 1994 and 1993, respectively.
(11) Export Sales
Export product sales, primarily to Canada, Europe, Mexico, Australia and
Japan accounted for 12%, 11% and 13% of total net revenues in 1995, 1994 and
1993, respectively.
35
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Continued)
(12) Restructuring Costs
In the second quarter of 1994, the Company restructured by downsizing in
all areas of its operations. This downsizing resulted in a 21% reduction in the
Company's work force worldwide. As a result, the Company recorded restructuring
costs as follows:
<TABLE>
<S> <C>
Write-downs of fixed assets, goodwill, inventory and $1,629,866
other assets abandoned as a result of the restructuring
Severance and related benefits for 40 terminated employees 1,486,665
Abandoned facilities costs 262,500
----------
$3,379,031
==========
</TABLE>
As of December 31, 1994, the restructuring had been completed, and there were no
additional restructuring charges taken in 1995. The Company had approximately
$82,000 of accrued restructuring charges remaining at December 31, 1995. None of
the previously accrued expenses were reversed to the Statement of Operations.
36
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Continued)
(13) Quarterly Results of Operations (Unaudited)
The following table presents a summary of quarterly results of operations
for the years ended December 31, 1995 and 1994:
<TABLE>
<CAPTION>
Year Ended December 31, 1995
----------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
Total revenues $8,541,101 $9,016,084 $9,568,619 $10,430,267
Gross profit 4,614,439 5,018,460 5,452,528 6,019,171
Net income 912,561 1,080,901 1,289,085 1,523,700
Net income
per share $0.12 $0.14 $0.16 $0.19
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1994
----------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
Total revenues $7,470,984 $6,097,346 $8,142,951 $8,335,840
Gross profit 3,079,881 2,189,594 4,093,163 4,450,113
Net income (loss) (1,294,615) (5,542,994) 468,580 619,073
Net income (loss)
per share ($0.24) ($1.03) $0.08 $0.09
</TABLE>
37
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To Davox Corporation:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Davox Corporation and subsidiaries
included in this Form 10-K, and have issued our report thereon dated January 22,
1996. Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states, in all material respects, the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 22, 1996
38
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance at Charged to Deductions Balance at
Beginning Costs and from End of
of Period Expenses Reserves Period
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
RESERVE FOR DOUBTFUL
ACCOUNTS AND SALES
ADJUSTMENTS:
December 31, 1995 $637,672 $242,185 $214,827(1) $665,030
December 31, 1994 686,847 338,289 387,464(1) 637,672
December 31, 1993 540,617 357,294 211,064(1) 686,847
</TABLE>
(1) Amounts deemed uncollectible and recoveries of previously reserved amounts.
ACCUMULATED AMORTIZATION
OF INTANGIBLE ASSETS:
<TABLE>
<S> <C> <C> <C> <C>
December 31, 1995 $433,819 $41,926 0 $475,745
December 31, 1994 391,894 41,925 0 433,819
December 31, 1993 349,968 41,926 0 391,894
ACCUMULATED AMORTIZATION
OF GOODWILL:
December 31, 1995 $406,386 $0 0 $406,386
December 31, 1994 362,908 43,478 0 406,386
December 31, 1993 343,559 19,349 0 362,908
</TABLE>
<PAGE>
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Not Applicable.
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -----------------------------------------------------------
Directors
The information concerning directors of the Company required under this
item is incorporated herein by reference to the Company's definitive proxy
statement pursuant to Regulation 14A, to be filed with the Commission not later
than 120 days after the close of the Company's 1995 fiscal year ended December
31, 1995 under the heading "Election of Directors."
Executive Officers
See Item 4A.
ITEM 11 EXECUTIVE COMPENSATION
- -------------------------------
The information required under this item is incorporated herein by
reference to the Company's definitive proxy statement pursuant to Regulation
14A, to be filed with the Commission not later than 120 days after the close of
the Company's 1995 fiscal year ended December 31, 1995, under the heading
"Compensation and Other Information Concerning Directors and Officers."
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -----------------------------------------------------------------------
The information required under this item is incorporated herein by
reference to the Company's definitive proxy statement pursuant to Regulation
14A, to be filed with the Commission not later than 120 days after the close of
the Company's 1995 fiscal year ended December 31, 1995, under the headings
"Principal Holders of Voting Securities" and "Election of Directors."
ITEM 13 CERTAIN RELATIONSHIPS AND TRANSACTIONS
- -----------------------------------------------
The information required under this item is incorporated herein by
reference to the Company's definitive proxy statement pursuant to Regulation
14A, to be filed with the Commission within 120 days after the close of the
Company's 1995 fiscal year ended December 31, 1995, under the headings
"Principal Holders of Voting Securities" and "Election of Directors."
40
<PAGE>
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------
(a) Financial Statements and Financial Statement Schedules
1. Financial Statements.
The following financial information is incorporated in Item 8 above.
Report of Independent Public Accountants
Consolidated Balance Sheets as of December 31, 1995 and 1994.
Consolidated Statements of Operations for the years ended
December 31, 1995, 1994, and 1993.
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1995, 1994 and 1993.
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedule.
The following financial information is incorporated in Item 8 above.
Report of Independent Public Accountants on Schedule
II - Valuation and Qualifying Accounts.
All other schedules are not submitted because they are not applicable, not
required or because the information is included in the Financial Statements
or Notes to Financial Statements.
(b) Reports on Form 8-K
The Company did not file any Current Report on Form 8-K during the fourth
quarter of the fiscal year ended December 31, 1995.
(c) List of Exhibits.
Exhibit
Number Description of Exhibit
------ ----------------------
3.01(8) Restated Certificate of Incorporation of the Registrant,
as amended.
41
<PAGE>
(c). List of Exhibits (continued)
3.02(3) By-laws of the Registrant, as amended.
4.01(8) Description of Capital Stock contained in the Registrant's
Restated Certificate of Incorporation, as amended, filed
as Exhibit 3.01.
4.02(4) Registrant's 10% Subordinated Term Note in the principal
amount of $2.3 million due September 1, 1993.
10.01(12) 1986 Stock Option Plan, as amended, of the Registrant.
10.02(10) Form of Incentive Stock Option Agreement under the
Registrant's 1986 Stock Option Plan.
10.03(3) Form of Non-Statutory Stock Option Agreement under
the Registrant's 1986 Stock Option Plan.
10.04(3) Incorporation Agreement of the Registrant dated June 1982.
10.05(5) Manufacturing Agreement dated as of February 20, 1987,
between the Registrant and Wong's Electronics Company, Ltd.
10.06(9) Amended Employment Agreement, dated as of July 20, 1991,
by and between the Registrant and Daniel A. Hosage.
10.07(3) Form of Nondisclosure Agreement.
10.08(5) Lease Agreement dated June 3, 1987, between the Registrant
and William J. Callahan, Trustee.
10.09(4) Stock Purchase Agreement among the Registrant, The Dispatch
Printing Company and TBS International, Inc. dated as of
September 15, 1987.
10.10(9) Amended and Restated 1988 Non-Employee Director Stock
Option Plan of the Registrant.
10.11(5) Form of Option Agreement under the Registrant's 1988
Non-Employee Director Stock Option Plan.
10.12(6) Asset Purchase Agreement dated August 9, 1988 between the
Registrant, DAVOX/VCT Corporation and Voice Computer
Technologies Corporation.
42
<PAGE>
(c). List of Exhibits (continued)
10.13(1) Merger Agreement dated December 15, 1988 between the
Registrant, DAVOX/VCT Corporation and TBS International,
Inc.
10.14(10) International Distribution Agreement between the Registrant
and Datapoint Corporation dated January 8, 1993.
10.15(1) Employee Deferred Compensation Savings Plan of the
Registrant.
10.16(8) Pledge Agreement dated September 12, 1990 between the
Registrant and Daniel A. Hosage.
10.17(8) Promissory Note dated September 12, 1990 from Daniel A.
Hosage in the principal amount of $100,000.
10.18(9) Severance Agreement dated June 26, 1991 between the
Registrant and Charles E. Carney.
10.19(9) Severance Agreement dated June 10, 1991 between the
Registrant and James F. Mitchell.
10.20(9) Severance Agreement dated June 10, 1991 between the
Registrant and J. Lawrence Doherty.
10.21(9) 1991 Employee Stock Purchase Plan.
10.22(10) Third party maintenance agreement dated August 3, 1992
between the Registrant and Grumman Systems Support
Corporation.
10.23(11) Surrender Agreement dated March 23, 1993 between the
Registrant and Daniel A. Hosage.
10.24(11) Notice of Settlement dated November 12, 1993 between
the Registrant and Daniel A. Hosage.
10.25(11) Sublease Agreement dated October 22, 1993 between
the Registrant and Digital Equipment Corporation.
10.26(12) Common Stock Purchase Agreement dated September 23, 1994
between the Registrant and the purchasers named therein.
43
<PAGE>
(c). List of Exhibits (continued)
10.27(12) Letter agreement dated December 30, 1994 between the
Registrant and Fleet Bank of Massachusetts, N.A.
10.28 Third party service provider agreement between the
Registrant and Grumman Systems Support Corporation.
22. Subsidiaries of the Registrant.
24. Consent of Arthur Andersen LLP.
27. Article 5-Summary Financial Data.
(1) Previously filed as an exhibit to Form 10-K for the fiscal year ended
December 31, 1988.
(2) Previously filed as an exhibit to Form 10-Q filed on November 11, 1988.
(3) Previously filed as an exhibit to Registration Statement No. 33-12689 filed
on March 17, 1987.
(4) Previously filed as an exhibit to Form 8-K filed on September 29, 1987.
(5) Previously filed as an exhibit to Form 10-K for the fiscal year ended
December 31, 1987.
(6) Previously filed as an exhibit to Form 8-K filed on September 15, 1988.
(7) Previously filed as an exhibit to Form 10-K for the fiscal year ended
December 31, 1989.
(8) Previously filed as an exhibit to Form 10-K for the fiscal year ended
December 31, 1990.
(9) Previously filed as an exhibit to Form 10-K for the fiscal year ended
December 31, 1991.
(10) Previously filed as an exhibit to Form 10-K for the fiscal year ended
December 31, 1992.
(11) Previously filed as an exhibit to Form 10-K for the fiscal year ended
December 31, 1993.
(12) Previously filed as an exhibit to Form 10-K for the fiscal year ended
December 31, 1994.
44
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized, in the Town of Westford,
Commonwealth of Massachusetts, on the 21st day of February 1996.
DAVOX Corporation
By: /s/ Alphonse M. Lucchese
--------------------------
Alphonse M. Lucchese
President, Chief Executive
Officer and Chairman
POWER OF ATTORNEY
Each person whose signature appears below this Annual Report on Form 10-K hereby
constitutes and appoints Alphonse M. Lucchese and Timothy C. Maguire and each of
them, with full power to act without the other, his true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for him or
her and in his or her name, place and stead in any and all capacities (until
revoked in writing) to sign all amendments (including post-effective amendments)
to this Annual Report on Form 10-K of Davox Corporation, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary fully to all intents and purposes as
he might or could do in person thereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his or her substitute,
may lawfully do or cause to be done by virtue hereof.
45
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, this Annual report
or amendment thereto has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Alphonse M. Lucchese President, Chief
- ------------------------
Alphonse M. Lucchese Executive Officer and
Chairman (Principal
Executive Officer) February 21, 1996
/s/ John J. Connolly Vice President of
- --------------------
John J. Connolly Finance and Chief
Financial Officer
(Principal Financial
Officer) February 21, 1996
/s/ Michael D. Kaufman Director February 21, 1996
- ----------------------
Michael D. Kaufman
/s/ R. Scott Asen Director February 21, 1996
- -----------------
R. Scott Asen
/s/ Walter J. Levison Director February 21, 1996
- ---------------------
W. Levison
46
<PAGE>
Exhibit 10.28
THIRD PARTY SERVICE
PROVIDER AGREEMENT
<PAGE>
This Third Party Service Provider Agreement ("Agreement") by and between DAVOX
Corp., a corporation organized under the laws of the State of Delaware,
hereinafter referred to as "DAVOX", with its principal place of business at 6
Technology Park Drive, Westford, Massachusetts, 01886 and Grumman Systems
Support Corporation, a corporation organized under the laws of Maryland with its
principal place of business at 10 Orville Drive, Bohemia NY 11716, herein
referred to as "GSSC", sets forth the terms and conditions under which GSSC will
provide Maintenance Services to DAVOX's end user customers (Customers).
DEFINITIONS
"Customer" means an entity which purchases Products for internal use and
not for resale.
"Hardware" means the hardware provided by DAVOX to GSSC or Customers.
"Product(s)" means any combination of Hardware and Software relating to
DAVOX CAS and UNISON(R) systems listed in Exhibit D, including any future
replacement system.
"Software" means all software system programs provided by DAVOX, in machine
readable, object printed, or interpreted form, including any modifications,
improvements, updates, enhancements or extensions thereto or copies thereof, and
including flow charts, logic diagrams, program listings and operating
instructions.
"Territory" means the specific Customer sites in the contiguous 48 United
States and Toronto, Canada agreed upon by DAVOX for GSSC to perform maintenance
service.
"Work Order Number" means that number which DAVOX issues to GSSC to
authorize GSSC to make a service call pursuant to a previously issued Work
Authorization Form. Such Work Order Numbers will normally be provided by DAVOX
to GSSC on a verbal or Fax basis to the service dispatch facility as designated
by GSSC. Requests for service from the Customer are not valid requests, and any
such calls acted on by GSSC shall be at risk, cost and expense of GSSC.
Consequently, GSSC shall have no obligation to respond to customer originated
service calls.
"Work Authorization Forms" means that certain document which DAVOX issues
to GSSC to authorize GSSC to perform Maintenance Service for a specific
Customer; for specific Product, at a specific location. This document will
specify the commencement date(s) and any special requirements of DAVOX and/or
the Customer, (Exhibit G).
"Certified Representative" means the GSSC's employee trained by DAVOX or
trained by GSSC's certified trainer on the Products to be maintained in
accordance with the Training and Documentation Schedule (Exhibit B).
<PAGE>
"OEM Equipment" means Original Equipment Manufacturer and is applied to
products other than manufactured by or specifically for DAVOX.
"Prelude(TM)" is a non-expandable, eight (8) slot variation of the DAVOX
UNISON(R) Call Center System.
In consideration of the terms herein set forth, DAVOX and GSSC agree as
follows:
1.0 APPOINTMENT OF GSSC
1.1 DAVOX hereby appoints GSSC as its exclusive service representative within
the Territory pursuant to the terms and conditions of this Agreement,
except as otherwise provided in this agreement or where DAVOX distributors
have sold system(s) and through agreement(s) with DAVOX are eligible to
provide all, or a portion of the required support services. GSSC agrees
not to solicit relationships with DAVOX competitors of their proprietary
product lines nor form a similar agreement with these firms. Except as
otherwise provided herein, DAVOX agrees not to solicit relationships with
competitors of GSSC for service of products sold by DAVOX.
1.2 When DAVOX has an obligation to provide Maintenance Service (as defined in
Exhibit "A") pursuant to the terms and conditions of contracts by and
between DAVOX and DAVOX's customers DAVOX shall appoint GSSC in accordance
with the following:
A. DAVOX shall appoint GSSC as its service representative to provide
Maintenance Service for customers located in the Service Cities set forth
on the schedule of Service Cities attached hereto as Exhibit F.
B. DAVOX shall offer to appoint GSSC as its service representative to provide
Maintenance Service to customers located in cities not listed on the
Schedule of Service Cities.
C. Service Cities may be added to the GSSC Service City Schedule from time to
time. If added, DAVOX will use reasonable efforts to obtain the customer
approvals to transfer the service responsibility to GSSC if GSSC was not
currently providing the service.
D. Service Cities may be deleted from the GSSC Service City Schedule from time
to time upon not less than ninety (90) days prior written notice to DAVOX.
In the event a Service City is deleted GSSC and DAVOX agree that
Maintenance Service coverage will be handled at DAVOX's option as follows:
GSSC shall continue to provide Maintenance Service coverage to customers in
the deleted Service City utilizing resources from another Service City or
GSSC location. Such Service coverage will be made available through the
end of any maintenance contracts not to exceed twelve (12) months between
DAVOX and its customers in effect at the time
<PAGE>
notice of deletion is received by DAVOX. DAVOX shall incur no additional
charges for coverage furnished from an alternative location under this
provision. DAVOX shall use reasonable efforts to make any necessary
contract changes with its customers needed to reflect the servicing from
GSSC's alternative location.
E. In the event (i) GSSC deletes a Service City from the Schedule of Service
Cities, (ii) declines any appointment pursuant to subsection (B) hereof, or
otherwise declines to furnish Maintenance Services to DAVOX customer, DAVOX
(iii) shall have the right to establish alternate forms of Maintenance
Service Coverage including providing service itself or contracting with a
third party.
F. In the event a DAVOX customer requests that DAVOX provide Maintenance
Service directly and not through GSSC or a third party DAVOX shall work
with GSSC to contact the customer in combination with DAVOX sales personnel
for the purpose of reestablishing or promoting GSSC as DAVOX's service
representative and as appropriate in DAVOX's determination. Notwithstanding
anything herein to the contrary, DAVOX shall not be obligated to require or
affirmatively appoint GSSC as its service representative with respect to
any customer who has requested or who requests that DAVOX provide
maintenance directly and not through a third-party. Notwithstanding any
provision to the contrary, GSSC shall have the sole and exclusive option to
decline accepting any end user that has declined or terminated GSSC
service.
1.3 Products, subject to Maintenance Service under the terms of this Agreement
will be added, deleted and/or revised under this Agreement by means of a
Work Authorization Form prepared and signed by DAVOX and submitted to GSSC.
2.0 TERM
2.1 This Agreement will commence on the Effective Date set forth below. Unless
otherwise determined as provided herein, this Agreement will have a term of
three (3) years ("term"), with subsequent amendment(s) for continuance of
service, unless terminated by either party pursuant to the provisions
hereof. Either party will have the right to terminate this Agreement as of
the end of the "Term" or as of the end of any subsequent annual renewal
upon not less than 90 day prior written notice to the other party.
3.0 GSSC RESPONSIBILITIES
GSSC's responsibilities to provide Maintenance Services hereunder shall include:
3.1 Rendering Maintenance Service, subject to the terms and conditions set
forth in the Schedule of Maintenance Services (Exhibit A) for the Customers
and product listed on the work authorization forms submitted and accepted
in accordance with this Agreement.
3.2 Sending qualified employees to DAVOX's training classes as set forth in the
Training and Documentation Schedule (Exhibit B);
<PAGE>
3.3 Providing installation and removal services to DAVOX in accordance with the
terms and conditions set forth in the Schedule of Installation and Removal
Services (Exhibit C);
3.4 Managing Parts in accordance with the terms and conditions set forth in the
Schedule of Parts Services (Exhibit E);
3.5 Effecting prompt payment of all valid invoices as rendered by DAVOX in
accordance with Article 5 below and the Schedule of Maintenance Service
Rates (Exhibit D) and the Schedule of Parts Services (Exhibit E).
3.6 Performing work in a prompt, courteous, efficient and workmanlike manner so
as to use best efforts to restore product to good working condition.
3.7 Keeping DAVOX advised of any complaints made by Customers or others with
respect to the Products or Maintenance Services.
3.8 Complying with all applicable federal, state, and municipal laws,
ordinances and regulations in carrying out the terms of this Agreement and
paying and discharging at its own expense any and all costs, charges, fees,
and taxes that may be levied or imposed by any and all authorities upon or
by reason of its performance under this Agreement.
3.9 Maintaining a staff of employees with sufficient technical knowledge and
training to fulfill GSSC's obligations under this Agreement, and an
inventory of parts sufficient to provide Maintenance Services in accordance
with the Schedule of Maintenance Services.
GSSC shall not make any representation or warranty or give any performance
guaranty to any Customer with respect to the Products or Maintenance
Services.
4.0 DAVOX RESPONSIBILITIES
DAVOX responsibilities hereunder shall include:
4.1 Making available, all proprietary Parts and diagnostics software necessary
for the service and maintenance of the Product;
4.2 Providing installation, service and removal instruction and documentation
for all Products to be maintained pursuant to the Agreement;
4.3 Providing adequate training for GSSC's Trainer personnel as described in
the Training and Documentation Schedule (Exhibit B); and
4.4 Providing the support services described in the Schedules of Maintenance
Services (Exhibit A); and
<PAGE>
4.5 Effecting prompt payment of all valid invoices as rendered by GSSC in
accordance with Article 5 below and the Schedule of Maintenance Service
Rates (Exhibit D).
4.6 DAVOX will periodically provide GSSC, at no charge, with the data,
diagrams, and other technical materials that DAVOX deems appropriate for
GSSC to support the Products within the Territory. DAVOX may limit the
number of copies of such technical materials that GSSC will be authorized
to make, if any. GSSC will, from this point forward, on new releases, (i)
consecutively number each such copy; (ii) maintain a current logbook that
records the number of copies that have been made, and (iii) reproduce all
confidentiality and proprietary notices on each copy it reproduces.
5.0 CHARGES, INVOICES, PAYMENT AND TAXES
5.1 Charges - Charges shall be as set forth in the Schedule of Maintenance
Service Rates (Exhibit D).
5.2 Invoices - GSSC invoices monthly in arrears. Each invoice rendered by GSSC
shall include the Customer name, DAVOX contract number, and service
location, and if for Per Call Services; the Work Order Number, date and
duration of each service call, and other detail which DAVOX may reasonably
request.
5.3 Payment - Payment for each valid invoice will be made in full within 30
days after receipt of invoice and supporting documentation. A late fee of
one and one half percent (1.5%) per month will be applied, at the
discretion of GSSC, to all outstanding invoices not remitted within 30
days. All charges to DAVOX under this Agreement shall include all taxes
applicable thereto.
5.4 Taxes - Prices set forth in this Agreement are exclusive of local, state,
or federal sales taxes. A Reseller certificate must be provided from DAVOX
to GSSC if applicable.
6.0 GSSC PERFORMANCE EVALUATION
6.1 GSSC will be evaluated on the following criteria: Interaction with DAVOX
and Customer personnel regarding such areas as responsiveness, product
knowledge, courtesy and flexibility; a review of GSSC's employees during in
house training to include their technical expertise and background, their
comprehension in receiving new technical information, their people and
problem solving skills.
6.2 A Customer survey may periodically be taken by DAVOX regarding GSSC's
responsiveness, product knowledge, problem solving skills, and Customer
interaction skills. Copies of survey ratings shall be supplied to GSSC and
GSSC shall not be held responsible for ratings below the minimal acceptable
rating resulting from DAVOX actions. Failure of GSSC to achieve a minimal
acceptable rating, as agreed in advance between GSSC and DAVOX, shall be
deemed failure to perform its obligations hereunder for purposes of Section
7.
<PAGE>
7.0 DEFAULT AND TERMINATION
7.1 The failure of either party to perform any obligation under this Agreement
shall be deemed a default thereunder, and if the non-defaulting party
provides notice of such default, including the details thereof, to the
defaulting party and such default is not cured within thirty (30) days of
such notice, the non-defaulting party may immediately terminate this
Agreement.
7.2 Termination of this Agreement or any part hereof will not adversely affect
any rights existing as of the effective date of termination. The rights
and remedies provided in this Agreement are cumulative and in addition to
any other rights or remedies available at law or in equity, any other
contract instrument or paper.
7.3 In the event GSSC breaches any end user agreement, solely and exclusively
because of GSSC's negligence or willful misconduct, then GSSC shall be
responsible to pay the cost actually incurred for DAVOX to cover its direct
losses, actually incurred, not to exceed the annual revenue to GSSC for the
affected end user contract. In no event, however shall this provision make
liable any consequential or indirect cost, charge or penalty of any nature
nor shall GSSC have to cover a loss incurred because any end user has
elected not to accept or continue GSSC services.
8.0 TITLE, RISK OF LOSS
8.1 GSSC will not have title or interest in the Product or to any Parts which
DAVOX may supply other than the hardware or any Parts which GSSC
specifically purchases. For GSSC purchased Parts, GSSC will bear the risk
of loss or damage with respect to Parts lost or damaged in shipment. No
license to GSSC is granted hereunder except as expressly set forth below.
For DAVOX owned Parts, GSSC will bear the risk of loss or damage with
respect to Parts in accordance with the terms and conditions set forth in
the Schedule of Parts Services. DAVOX will bear the risk of loss or damage
with respect to DAVOX owned Parts lost or damaged in shipment.
8.2 Subject to the terms of this Agreement and the below referenced license
(Exhibit I), DAVOX hereby grants to GSSC a personal, nontransferable,
nonexclusive license (The "License") to use the software DAVOX shall
furnish to GSSC solely for purposes of providing Maintenance Services to
Customers under the terms of this Agreement.
GSSC shall not reverse compile, disassemble or otherwise reverse engineer,
embed within any other software product, or modify in any manner, including
modifications to source code with respect thereto, the software, in whole
or in part. The software may be copied, in whole or in part, only to the
extent necessary for GSSC's use on GSSC's designated single CAS products,
controller unit, personal computer, workstations or UNISON(R) products for
backup purposes or to replace a worn or defective copy. If GSSC is unable
to operate the software on the single designated CAS products, controller
unit, personal
<PAGE>
computer, workstation or UNISON(R) products due to an equipment
malfunction, the software may be transferred temporarily to another CAS,
controller unit, personal computer, workstation or UNISON(R) during the
period of equipment malfunction. GSSC shall include any and all copyright
and proprietary notices placed on the Software by DAVOX on all copies of
the Software. GSSC shall use its best efforts to not disclose, provide or
otherwise make available the Software or Source Code or any Part or copy
thereof to any third party. The Software and the Source Code shall be
deemed Confidential information of DAVOX for purposes of Section 10 of this
Agreement. All copies of Software and Source Code, whether provided by
DAVOX or made by GSSC in accordance with this Agreement, including without
limitation, translations, compilations or partial copies are the property
of DAVOX and may not be used or disclosed except as permitted by this
Agreement. All right, title and interest to, and all applicable rights in
patents, copyrights, and trade secrets in, the Software shall at all times
remain vested in DAVOX or in any third party from whom DAVOX has acquired
rights to license the Software. DAVOX shall indemnify and hold GSSC and its
agents harmless from any claim or liability arising from patent, copyright
or trade secret infringement, subject to and in accordance with the terms
in Section 16.1 of this Agreement.
The license granted to GSSC hereunder shall expire upon expiration or
termination of this Agreement. GSSC agrees, upon expiration of such
license term or upon notice of termination, to immediately return or
destroy the Software, the Source Code and all portions and copies thereof
as directed by DAVOX, and, if required, to certify in writing as to the
destruction or return of the Software, the Source Code and all copies
thereof.
If necessary, DAVOX will take action to enforce compliance with the terms
of the license on its behalf and on behalf of any third party for which it
licenses the Software. In the event it becomes necessary to furnish GSSC
with Software related to Smart Management Center (SMC) products the parties
agree that such Software will be loaned to GSSC in accordance with the
terms set forth hereunder, and such other terms as may be required by
DAVOX's third-party software vendors and mutually agreed to in writing by
the parties.
9. FORCE MAJEURE
9.1 If the performance of this Agreement, or any obligation hereunder is
prevented, restricted, or interfered with by reason of fire, flood,
earthquake, explosion, or other casualty or accident, strikes or labor
disputes, inability to procure or obtain delivery of parts, supplies or
power, war or other violence, any law, order, proclamation, regulation,
ordinance, demand or requirement of any governmental agency, or any other
act or condition whatsoever beyond the reasonable control of the affected
party, the party so affected, upon giving prompt notice to the other party,
shall be excused from such performance to the extent of such prevention,
restriction, or interference; provided however, that the party so affected
shall take all reasonable steps to avoid or remove such cause of
nonperformance and shall promptly resume performance hereunder.
Notwithstanding anything in this Agreement to the contrary, in the event
that GSSC is unable to perform its obligations hereunder, DAVOX shall have
the right to establish alternative sources of
<PAGE>
maintenance service coverage, including providing service itself or
contracting with a third party when such restriction or interference is
removed or becomes surmountable.
10. CONFIDENTIALITY
10.1 Confidentiality. The parties hereto acknowledge that the Products
incorporate confidential and proprietary information developed or acquired
by or licensed to the respective parties (the "Information"). Both parties
will take all reasonable precautions necessary to safeguard the
confidentiality of the Information, including (i) those taken by the
respective parties to protect their own confidential information and (ii)
those which may be reasonably requested from time to time. Neither party
will allow the removal or defacement of any confidentiality or proprietary
notice placed on the Products or other items of Information. The placement
of copyright notices on these items will not constitute publication or
otherwise impair their confidential nature.
10.2 Ownership. All patents, copyrights, circuit layouts, trade secrets and
other proprietary rights in or related to the Products are and will remain
the exclusive property of disclosing party or its licensors, whether or not
specifically recognized or perfected under the laws of the Territory.
Neither party, by this Agreement, takes any action that jeopardizes its or
its licensors' proprietary rights or acquire any right in the Products or
Information, except the limited use rights specified in Section 9(c).
10.3 Use. Both parties will use the Products and other items of Information
exclusively to perform its marketing and service activities pursuant to
this Agreement. Except as specifically contemplated in Exhibit B, GSSC will
not copy, translate, modify or adapt the Products, Promotional Literature
or other items of Information without DAVOX's prior written approval.
Each party will reproduce the disclosing party's or its licensors'
confidentiality and proprietary notices on all such copies. Neither party
will decompile, disassemble or reverse engineer the Products or information
of the other, except as and to the extent specifically permitted under
applicable law. GSSC will promptly notify DAVOX if GSSC intends to create
any shell or supplemental software that will be combined with the Products.
At DAVOX's request, GSSC will provide DAVOX with the specifications, flow
charts, source and object code and other documentation for such programs.
10.4 Disclosure. GSSC will not disclose, in whole or in part, the Information
except to those of GSSC's employees who require access to perform its
obligations under this Agreement and have executed a confidentiality
agreement identical to that attached as Exhibit J (the "Non-Disclosure
Agreement"). The parties will execute all Non-Disclosure Agreements as
principal on its behalf and, exclusively to accept or otherwise perfect
both parties individual rights thereunder, as agent on behalf of said
party. At either party's cost and request, both parties will provide the
other with copies of all Non-Disclosure Agreements. In no event will
either party amend or cancel any Non-Disclosure Agreement without the
other's prior approval.
<PAGE>
10.5 Unauthorized Use or Disclosure. The parties acknowledge that any
unauthorized use or disclosure of the Information may cause irreparable
damage to the other party or its licensors. If an unauthorized use or
disclosure occurs, the party from which such use of disclosure occurs will
promptly notify the other party and take, at its reasonable expense, all
steps which are necessary to recover the Information and to prevent its
subsequent unauthorized use or dissemination.
10.6 Limitation. Neither party will have any confidentiality obligation with
respect to any portion of the Information that (i) it independently knew or
developed before receiving the Products or Information from the other, (ii)
it lawfully obtained from a third party under no obligation of
confidentiality, (iii) became available to the public other than as a
result of an act or omission of any of its employees or customers or (iv)
is subject to subpoena. Under any of these circumstances, the party
seeking to release information will notify the other at least 30 days
before disclosing such portion of the Information known to be confidential
to any other person.
11.0 INSURANCE AND INDEMNITY
a. GSSC shall, at all times during the term of this Agreement, at its
sole cost and expense, carry the following insurance coverages written by
reputable insurance companies admitted to and authorized to do business in
the state in which the insurance policy is written and having a financial
rating of VIII and a policyholder's rating of A in the most recently
published A.M. Best's Rating Guide.
1. Workers' Compensation Insurance with a broad form all states
endorsement covering all employees for statutory limits in accordance
with the laws of the states in which GSSC will be providing Services;
2. Employers' Liability Insurance with a limit of not less than
$1,000,000 for bodily injury for each accident; and $1,000,000 for
bodily injury by disease for each employee and for the policy limit;
3. Commercial General Liability Coverage, written on an occurrence
basis including completed operations, covering claims for bodily
injury including death, personal injury, and property damage
regardless of when such claims are filed, with a combined single limit
of $10,000,000 per occurrence.
b. Upon execution of this Agreement and immediately upon renewal
of any coverage required hereunder, GSSC shall provide DAVOX with
certificates of insurance, issued by or on behalf of the appropriate
insurance companies, showing:
1. that the insurance coverage required under this Section 13 is in
force; and
<PAGE>
2. that the insurance company(ies) issuing such policy(ies) have
agreed to notify both GSSC and DAVOX of any cancellation at least
thirty (30) calendar days prior to the effective date of such change
or cancellation.
c. All insurance required by this Agreement shall be provided on a
"primary basis" regardless of any other insurance DAVOX may elect to
purchase and maintain. Accordingly, no insurance coverage required of GSSC
shall be subject to an "excess" or "pro-rata" type of other insurance
clause nor shall any coverage by subject to any clause which would be
contrary to the aforesaid intent of the parties.
d. Except for GSSC's Workers' Compensation Insurance, all of the policies
required of GSSC shall include DAVOX, identified as DAVOX Corporation and
its divisions or subsidiaries as additional insureds.
e. In the event that GSSC fails to deliver the certificate of insurance
to DAVOX as required hereunder, DAVOX shall notify GSSC in writing and GSSC
shall have twenty (20) days (but shall use its best efforts to obtain same
within ten (10) days) to furnish a certificate as required by this Section,
if GSSC fails to provide said certificate to DAVOX then, DAVOX, at its sole
discretion and solely for DAVOX's own benefit, shall have the right to
obtain the insurance coverage as expressly covered herein, and the premium
and other related costs shall be charged to GSSC. GSSC's failure to
exercise its discretion in this regard does not relieve GSSC from its
obligations or liabilities hereunder, not create any liability on the part
of DAVOX.
Nothing in this Section 11.0 shall be deemed to expand or modify the rights,
remedies and liabilities of the parties as set forth elsewhere in this
Agreement.
12.0 LIMITATION OF LIABILITY
12.1 EXCEPT FOR GSSC'S OBLIGATIONS UNDER SECTION 11 AND CLAIMS ARISING OUT OF
BREACH OF SECTION 8 AND 10, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
ANY INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS
OF PROFITS, REVENUE, DATA, OR USE, INCURRED BY EITHER PARTY ARISING OUT OF
THE AGREEMENT, WHETHER IN CONTRACT OR IN TORT, EVEN IF THE OTHER PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
13.0 INDEPENDENT CONTRACTOR
13.1 DAVOX and GSSC are independent parties. Nothing in this Agreement shall be
construed to make either party an agent, employee, franchisee, joint
venturer, partner or legal representative of the other party. Except as
other provided in this Agreement, neither parties hold, have nor represent
itself to have any authority to act on the others behalf.
<PAGE>
14. HIRING/COMPETITION
14.1 During the term of this Agreement and for six (6) months thereafter, GSSC
and DAVOX agree to refrain from soliciting for employment without the prior
written consent of the other, their respective employees.
14.2 GSSC agrees not to solicit existing or future DAVOX Customers with any
offer to provide direct services for support of DAVOX Products. If during
the course of this Agreement, existing or future DAVOX customers request
service from GSSC on DAVOX equipment, those requests will be forwarded to
DAVOX.
15.0 GENERAL PROVISIONS
15.1 This Agreement is not assignable, in whole or in part, by either party
without the prior written consent of the other party, and any attempt to
make such assignment shall be void, except for assignments to wholly owned
subsidiaries or affiliates.
15.2 This Agreement shall be governed and construed in accordance with the laws
of the United States and the State of Massachusetts as applied to
agreements to be performed entirely within Massachusetts between
Massachusetts residents.
15.3 The following provisions shall survive the expiration or termination of
this Agreement; Sections 8, 10, 11, 12, 13, 14, and 15.
15.4 This Agreement, including the Exhibits hereto, is the complete and
exclusive statement of the agreement between the parties and supersedes any
and all prior agreements and communications with respect to the subject
matter. The terms of this Agreement shall apply notwithstanding any
proposed variations or additions which may be contained in any purchase
order or other communication submitted by GSSC. No DAVOX or GSSC employee
other than the authorized person or officer of GSSC or DAVOX shall have any
actual or apparent authority to modify the terms of this Agreement in any
way. All authorized modifications shall be in writing and signed by such
authorized representative of DAVOX and GSSC.
15.5 In case any one or more of the provisions contained in this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegally or unenforceability shall not
affect any other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never
been contained herein.
15.6 Any item or service furnished by DAVOX or GSSC in furtherance of this
Agreement, although not specifically identified in it, shall nevertheless
be covered by this Agreement unless specifically covered by some other
written agreement executed by GSSC and an authorized representative of
DAVOX.
<PAGE>
15.7 Whenever notice or requests may be or are required to be given by either
party to the other, such notices shall be in writing and shall be sent by
fax (transmission confirmed) or by registered or certified air mail, return
receipt requested, or its equivalent, air postage prepaid. Notice shall be
deemed effective one hour after faxing or ten (10) days following the date
sent. The addresses of the parties (unless and until written notice of
change shall have been given) shall be as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DAVOX: DAVOX Corporation Grumman: Grumman Systems Support
6 Technology Pk Drive 10 Orville Drive
Westford, MA 01886 Bohemia, N.Y. 11716
FAX No. (508) 952-0201 FAX No. (516) 563-6881
Attn: Contract Administration Attn: Doug Hoffman
</TABLE>
15.8 It is the intent of the parties to explore expanded service opportunities
relative to DAVOX Products in terms of installation, remedial maintenance
and extended support and to design and implement such new programs and
service levels as the parties may mutually agree.
15.9 All rights and remedies conferred under this Agreement or by any other
instrument or law shall be cumulative, and be exercised singularly or
concurrently. Failure by either party to enforce any provision shall not
be deemed a waiver of future enforcement of that or any other provision.
16.0 INFRINGEMENT INDEMNIFICATION
16.1 DAVOX will defend GSSC against any claim that DAVOX's proprietary hardware
or software supplied hereunder infringes on any valid United States patent
or copyright and will pay resulting costs, damages and attorney's fees if
(i) GSSC promptly notifies DAVOX in writing of such claim, (ii) GSSC gives
DAVOX sole control of the defense and all related settlement negotiations
and (iii) GSSC, provides DAVOX with reasonable assistance in the defense of
such claim. If any claim which DAVOX is obligated to defend has occurred
or is likely to occur, GSSC agrees to permit DAVOX, at its option and
expense, either to procure the right for GSSC to continue using the
hardware or software, or to replace or modify the hardware or software so
that ft becomes non-infringing. If neither of the foregoing alternatives
is available on terms which are acceptable to DAVOX, GSSC agrees to return
the hardware or software upon written request by DAVOX and GSSC shall be
released of any obligation for the support of such hardware or software.
DAVOX shall have no obligations to GSSC under any provisions of this
Section with respect to any claim based on the use of hardware or software
in combination with equipment, devices, or software not supplied by DAVOX
or upon the use of the hardware or software in a manner for which they were
not intended or modification of the Hardware or Software by persons other
than DAVOX. The foregoing states the sole and exclusive
<PAGE>
liability of DAVOX for infringement of any kind and is in lieu of all
warranties, express or implied, in regard thereto.
GSSC agrees not to modify or combine with any equipment, device or software
not supplied by DAVOX any DAVOX Product provided hereunder unless directed
to do so in writing by DAVOX.
17.0 MARKS
a. Ownership. All trademarks, service marks, trade names, logos or other
words or symbols identifying the Products or either party's business (the
"Marks") are and will remain the exclusive property of such party or its
licensors, whether or not specifically recognized or perfected under the laws of
the Territory. Neither party will take any action that jeopardizes the owners or
its licensor's proprietary rights or acquire any right in the Marks, except the
limited use rights specified in Section 10(b). GSSC will not register, directly
or indirectly, any trademark, service mark, trade name, copyright, company name
or other proprietary or commercial right which is identical or confusingly
similar to the Marks or which constitute translations thereof into the
language(s) spoken within the Territory. upon either party's request and
expense, such party will execute the instruments that may be appropriate to
register, maintain or renew the registration of the Marks in the appropriate
party's or its licensor's name within the Territory.
b. Use. The parties will use the Marks exclusively to advertise and promote
the Products and services within the Territory. All advertisements and
promotional materials will (i) clearly identify the owner or its licensors as
the owner of the Marks, (ii) conform to the respecting party's then-current
trademark and logo guidelines and (iii) otherwise comply with any local notice
or marking requirement contemplated under the laws of the Territory. Before
publishing or disseminating any advertisement or promotional materials bearing a
Mark, each party will deliver a sample of the advertisement or promotional
materials to the owner for prior approval. If the owner notifies the
distributing party that the use of the Mark is inappropriate, the distributor
will not publish or otherwise disseminate the advertisement or promotional
materials until they have been modified to owner's satisfaction.
<PAGE>
c. lnfringement. Each party will immediately notify the other if it learns (i)
of any potential infringement of the Marks by a third party or (ii) that the use
of the Marks within the Territory infringe the proprietary rights of a third
party. The owner will determine the steps to be taken under these circumstances
at its sole expense, if any. The parties will (i) provide each other with the
assistance that said party may reasonably request at owner's sole expense, if
any and (ii) take no steps on its own without owner's prior approval. By
execution hereof, the signer for GSSC and DAVOX hereby certifies that he/she has
read, understands and is duly authorized to execute this Agreement on behalf of
their company.
GRUMMAN SYSTEMS SUPPORT DAVOX CORPORATION
- ----------------------- -----------------
BY: BY:
-----------------------
NAME: Wesley R. Stout NAME: Edward D. Kay
TITLE: Vice President TITLE: Vice President, Customer Service
DATE: EFFECTIVE DATE:
--------------------- -------------------------
<PAGE>
EXHIBIT A
SCHEDULE OF MAINTENANCE SERVICES
1. Upon receipt and acceptance of a Davox Work Authorization Form for any
given Customer, GSSC will provide Maintenance Services for the Product
situated at such Customer location. Maintenance Services for purposes of
this Agreement shall mean the Maintenance obligations set forth under the
terms of the Maintenance Agreement between Davox and the Customer. Each
Work Authorization Form shall include all those hardware components
comprising a Davox call center system as contracted to Davox.
2. Davox will contract directly with each Customer using Maintenance
Agreements in essentially the same form as Exhibit H hereto.
3. Customers will contact the Davox National Support Center in Westford, MA
with all requests for service.
4. Davox will attempt to fault isolate, with the minimum use of diagnostic
programs, the reported problem and, if possible, instruct the Customer on
steps to be taken to remedy the problem.
5. In the event Davox determines that hardware on-site service is required,
the Davox National Support Center will contact the GSSC dispatch facility
and request such on-site service. A valid request by Davox must include a
Work Order Number, which must appear on all documents relating to the
service call in question. The Davox National Support Center is the only
recognized party to GSSC that is authorized to initiate a service call on
Davox call center systems.
6. During normal business hours, GSSC will provide a four hour (on-site)
response, from receipt of request from Davox, to Customers within 50 miles
of such Service City, and will provide best effort not to exceed eight (8)
hour response to Customers who are situated from 51 to 100 miles of such
Service City, in which case Zone charges shall apply. Service requests
beyond 100 miles of a GSSC Service City will be responded to on a best
efforts basis. Service requests received by GSSC after normal business
hours (as measured in the Service City) will be handled on a best efforts
basis unless the customer has contracted for extended hours of coverage.
7. GSSC will prepare and submit to Davox a Field Service Activity Report or a
system generated Service Management report for each service call performed
by GSSC. Each such service activity will reference the Work order Number
as issued by Davox.
8. GSSC and Davox agree, on an ongoing basis, to jointly develop and to
formalize control procedures and forms to satisfy the intent stated above.
Wherever practicable, Davox agrees to use existing procedures and forms of
GSSC.
<PAGE>
9. GSSC will always render Maintenance Service in a prompt, courteous,
efficient and workmanlike manner so as to restore the Equipment to good
working condition.
10. Any request for Maintenance Service started during normal business hours
will be worked through to one hour past the PPM and will be treated as
having been accomplished during normal business hours and no additional
charges will be made. Maintenance Services exceeding one hour past the PPM
will be billed at GSSCs then current Time and Materials rate. (See Exhibit
D for PPM definition).
11. If engineering changes, feature changes, or safety changes are developed by
Davox for installed items of Product, such changes will be installed by
Davox or if Davox requests, GSSC will install such changes, within Service
Cities, on a Per Call Services basis (per Exhibit D) or a mutually agreed
to fixed fee basis. All components, parts and instruction packages
necessary for GSSC to install engineering, feature or safety changes will
be delivered by Davox to GSSC at no cost to a location determined by GSSC
for distribution and installation control. GSSC will incorporate all
mandatory FCO's for all Customers and the implementation of suggested FCO's
will be at the discretion of GSSC unless otherwise agreed to for a specific
customer.
12. GSSC shall have no obligation to perform service on Product if the Customer
does not provide GSSC with full and free access to the Product and a safe
place in which to perform such service.
13. GSSC will accept Maintenance Service responsibility in accordance with the
effective date on the Work Authorization Form, which will be after
completion of the required training classes, as outlined in Exhibit B. GSSC
will continue such Maintenance for the full term of Davox's Maintenance
Agreement with the Customer. Davox may discontinue Maintenance Service as
to any Product by sending to GSSC a fully completed and executed Work
Authorization Form designating discontinuance. Such discontinuance will
become effective with respect to the Product thirty (30) days after receipt
of the Work Authorization Form. When the collecting party finds it
necessary to terminate or suspend Maintenance Service because of payment
delinquency by its Customer, then the requirement for 30 day advance notice
will be waived; such termination or suspension will be effective
immediately upon notification to GSSC by Davox.
14. In the event that any Product being maintained under the terms and
conditions of this Agreement is moved from one GSSC service City to another
GSSC Service City, GSSC will continue to maintain the Product at the new
location if:
a. Such Product is installed by GSSC, or
b. GSSC has conducted an inspection after installation at the new
location and accepts such Product for Maintenance Service under this
Agreement; and,
c. Davox has delivered to GSSC a fully completed and executed Work
Authorization Form.
<PAGE>
d. Zone charges will be applied as defined in Exhibit D.
If, in the opinion of GSSC, the Product does not qualify for
Maintenance Service because of transit damage, warehouse
deterioration, excessive wear, or poor or improper service by other
than GSSC, damage from any other cause and/or improper installation by
other than GSSC, GSSC shall prepare a formal written report to Davox
detailing its findings. If GSSC is requested to perform such repairs
as it deems necessary to qualify the Product for Maintenance Service,
then GSSC will invoice Davox for such repairs in accordance with the
terms and condition of the Per Call Services Schedule.
15. From time to time, Davox may require service on Products not covered by
this Agreement. To the extent that Davox provides a Work Authorization
Form and a Work Order Number; GSSC agrees to provide service on a best
effort basis. Such service will be billed to Davox at the Per Call Rates
in Exhibit D.
16. From time to time, Davox may require service of new Product (e.g., Product
which Davox secures from another supplier, and provides to a Customer as
part of a package tailored to such Customers requirements or a newly
developed Davox proprietary product). GSSC agrees to cooperate with Davox
with a view toward developing an appropriate service program for such
Product.
17. Davox will provide GSSC with hardware and software technical telephone
support at no additional cost to GSSC. Davox will also provide on-site
technical assistance, when required, at no additional cost to GSSC.
18. Davox and GSSC intend to evaluate the support requirements for new Davox
hardware products, and to pursue extensions or addendum to this Agreement,
if mutually determined by the parties to be appropriate, on a product by
product basis.
<PAGE>
EXHIBIT B
TRAINING, DOCUMENTATION, AND ESCALATION SCHEDULE
TRAINING
Call center system maintenance training Will be held at either Davox or GSSC
regional facilities, as mutually agreed to by both parties. Training classes,
as taught by Davox, will be provided at no cost, excluding travel and expenses,
to GSSC. Call center system maintenance training will consist of:
Hardware Maintenance
This course is designed to teach system maintenance professionals the
skills and concepts necessary to perform the first level of diagnostic
testing and maintenance of the different configurations of Davox Systems.
The course is built around activities that teach the proper use of
diagnostic tools to troubleshoot and maintain the systems to the field
replaceable units.
System Administration
This class provides a hands-on approach in setting up, maintaining, and
troubleshooting several types of typical work environments with the emphasis
being placed on non hardware issues.
GSSC will implement a train the trainer program to insure proper training of
GSSC personnel. Davox will provide and/or make available the required hardware,
documentation and diagnostics, including freight, at no cost to GSSC. Davox
will also provide initial training on new products for GSSC designated training
personnel at no charge. Sufficient hardware will be made available by Davox in
order to conduct the required training classes necessary to meet any proposed
new product rollout schedule.
From time to time Davox may make available training in the field by way of
documentation, video tape, local seminars etc. to update GSSC's personnel on new
Products or enhancements, at no cost to GSSC.
GSSC grants Davox the right to use and right to reproduce improved training
methods and materials that GSSC may develop on Davox proprietary systems. GSSC
will provide accessibility to GSSCs current training programs that might be
applicable to Davox.
TECHNICAL INFORMATION DISTRIBUTION
Certified field engineers will be added to Davox technical mailing list where
technical information is communicated on a regular basis. GSSC will be
responsible for distributing Technical Information to the appropriate personnel.
<PAGE>
Call problem resolution information will be maintained by the Davox National
Support Center. All work orders, RNs, call logs, etc. are logged and reports
generated through Davox's database.
DOCUMENTATION
Installation Guides, Service Manuals, Diagnostic Manuals, Media and Illustrated
Parts Catalogs for Products maintained by GSSC will be provided at no cost to
each person attending the Hardware Maintenance class conducted by either a Davox
or GSSC trainer.
Davox grants GSSC the right to reproduce all Davox supplied documentation for
the sole use of supporting the services provided on Davox proprietary systems.
GSSC grants Davox the right to use and right to reproduce improved documentation
that may be developed by GSSC on Davox proprietary products.
ESCALATION
GSSC understands the need to establish the lines of communication and identify
the responsible personnel and/or departments to resolve customer problems. GSSC
will adhere to the Davox published service call escalation schedule in
resolution of a remedial service activity.
<PAGE>
EXHIBIT C
SCHEDULE OF INSTALLATION AND REMOVAL SERVICES
GSSC will, upon request from DAVOX, provide installation, removal and
relocation services as directed. Installation pricing is offered as revenue
share of Davox list installation pricing and, as an option, fixed price for the
equipment as specifically listed in Exhibit D, item 4B. However, site
requirements, preinstall preparation and configuration conditions contributing
to successful installations must be met exclusively to avoid out-of-scope
charges.
Where GSSC has to return to a site due to problems beyond our control (eg.
defective or missing hardware, telco circuit failure, etc.) a billable condition
may exist at the prevailing Time and Material rate.
GSSC will not be responsible for local utility or in-house communication
wiring. Sites must be properly prepared to receive equipment including, but not
limited to, proper furniture, A/C utility electric, communication/LAN cabling
and be in accordance with local safety and building codes. GSSC reserves the
right to invoice over and above the firm fixed price for return trips to a site
not properly prepared and that prevent and/or impact the successful installation
of equipment. GSSC also reserves the right to invoice over and above the firm
fixed installation price if DAVOX requests GSSC to correct deficiencies related
to site preparedness.
Installation Service consists of:
a. Unboxing and validation of all Davox hardware;
b. Installation of base system hardware and hardware options shipped with the
system;
c. Verification of hardware functionality through system diagnostics; and
d. Notification to Davox of unusual installation problems (e.g., missing
parts, transit damage, etc.) which Davox will have the burden of correcting
prior to GSSC's assumption of Maintenance Service responsibility. Return
trips to a site due to defective or missing hardware and or site
unpreparedness will be billable at GSSC's time and material rates.
Removal Service consists of:
<PAGE>
a. Disconnecting the Product; and
b. Making the Product ready for shipment, including securing cables and
movable or removable panels and subassemblies in accordance with Davox's
instructions.
<PAGE>
EXHIBIT D
SCHEDULE OF MAINTENANCE SERVICE RATES
A. PERIODS OF MAINTENANCE
Period of Principal Maintenance (PPM) - is defined as eight (8) consecutive
-------------------------------------
hours per day of maintenance support, Monday - Friday, excluding GSSC
Holidays. The PPM will be contained within the time period from 8:30 AM to
5:30 PM.
Periods of Extended Maintenance (PEM) is defined as consecutive hours per
-------------------------------------
day, excluding Davox Holidays, that are added to the initial eight (8)
hours PPM period to provide the Customer with more than eight (8) hours per
day of remedial maintenance coverage. The PEM period must immediately
follow the PPM period so as to result in continuous hours of coverage.
Contracted maintenance support that includes weekend coverage is also
considered a Period of Extended Maintenance.
B. GSSC'S SERVICE RATES
1. TIME AND MATERIALS FEES
------------------------
$[OMITTED: CONFIDENTIAL TREATMENT REQUESTED]/hour
Mon - Sun 8 a.m. - 8:00 a.m. (2 hr. min) (includes Sat, Sun & Holidays)
2. EXTENDED COVERAGE
-----------------
Uplifts for extended hours of coverage are a surcharge to the basic monthly
service charge (BMMC) of the Call Center products and their respective firm
fixed pricing. However, availability must be determined upon specific
request.
Extended Coverage Schedule:
<TABLE>
<CAPTION>
8 Hours 12 Hours 16 Hours 24 Hours
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
Monday - Friday N/A *% *% *%
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Monday - Saturday or *% *% *% *%
Sunday
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Monday - Sunday *% *% *% *%
- ----------------------------------------------------------------------------------
</TABLE>
* OMITTED: CONFIDENTIAL TREATMENT REQUESTED
2 hour response time: uplifted [OMITTED: CONFIDENTIAL TREATMENT
REQUESTED]% of PEM charges. ($[OMITTED: CONFIDENTIAL TREATMENT REQUESTED]
minimum) availability determined upon request.
<PAGE>
3. UPLIFTS FOR EXPANDED ZONE COVERAGE are a surcharge to the applicable Fixed
Price
<TABLE>
<CAPTION>
UPLIFT MILES COVERED
------ -------------
<S> <C>
No additional charge 0 - 50
[OMITTED: CONFIDENTIAL 51-100
TREATMENT REQUESTED]%
Reimbursement of incurred expenses Over 100
Response on best effort basis
</TABLE>
4. MAINTENANCE AND INSTALLATION/REMOVAL SERVICE PRICING
4A. OPTION 1, REVENUE SHARE
1. Remedial Maintenance: [OMITTED: CONFIDENTIAL TREATMENT REQUESTED]% of
Monthly Applicable, Davox Maintenance Fee
2. Installation/Removal Services: [OMITTED: CONFIDENTIAL TREATMENT
REQUESTED]% of Davox list with a minimum of $[OMITTED: CONFIDENTIAL
TREATMENT REQUESTED] and a maximum charge of $[OMITTED: CONFIDENTIAL
TREATMENT REQUESTED] for sites within 50 miles from a GSSC service
city. Zone uplifts apply for installations performed beyond the 50
mile range.
4B. OPTION 2, FIXED PRICING SCHEDULE
1. CAS installation/removal services will be performed on a Time and
Material basis and in accordance with the Schedule of Installation and
Removal Services found in Exhibit C. Where fixed installation pricing
for products comprising UNISON call center equipment is similar or
identical to those products comprising a CAS call center, the Davox
preferred time and material rate will apply for the installation or
removal service of CAS call center products.
2. Firm Fixed installation pricing for Unison Call Center Systems are
designated per line item. As products are introduced, modified,
upgraded or revised, GSSC will provide product/component pricing via
amendment to the Third Party Service Provider Agreement.
3. Firm Fixed Remedial Maintenance pricing is designated per line item.
As products are introduced, modified, upgraded or revised, GSSC will
provide
<PAGE>
product/component pricing via amendment to the Third Party Service
Provider Agreement.
<PAGE>
<TABLE>
<CAPTION>
UNISON (Call Center Systems)
<S> <C> <C> <C> <C>
SUN S2OT1N-514-64-P4L SPARCstation 20 $* $*
SUN S5T1N-70-32-P44 SPARCstation 5 $* $*
SUN S10S-40-32-P46 SPARCstation 10 $* $*
SUN S10S-43-32-P46 SPARCstation 10 $* $*
SUN 4/15C-16-P43 SPARCclassic $* $*
SUN 4/15FC-16-P43 SPARCclassi $* $*
SUN 1.05 GB/ X545A-ST Ext Hard Drive $* $*
SUN 2.1 GB/X567A-ST Ext Hard Drive $* $*
DVX DSP SHELF DIALER $*(1) $*
DVX DSP Processor Expansion PCB INCLUDED(1) $*
INTEL PCEM72144F Modem $* $*
GENICOM 3410 Printer $* $*
DEC LA-424 Printer $* $*
HP 550 Printer $* $*
HP 560 Pringer $* $*
SUN CPRN-360 NEWSprinter CL + $* $*
MILAN MIL4000H 10 base T Hub $* QUOTE ONLY
SONY RM-S350 Optical Drive $* $*
Pinnacle Micro Optical Drive $* $*
AST 386 Personal Computer $*(2) $*
AST 486 Personal Computer $*(2) $*
Logicraft RCS Personal Computer $* $*
GNP Comm Intrfce $* $*
Chase IOLAN Terminal Server $* $*
Exabyte 8MM Ext. Tape Sub-System $* $*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MODEL DESCRIPTION BMMC INSTLL/REMVL
----- ----------- ---- ------------
CAS (Collection Agency Systems)
<S> <C> <C> <C> <C>
DVX CAS 50 Auto Dialer $* (1) T&M
DVX CAS 500 Auto Dialer $* (1) T&M
DVX CAS 1000 Auto Dialer $* (1) T&M
DVX CAS2000 Auto Dialer $* (1) T&M
DVX DN04-01 Net CRS Intrfce Adaptr $* (1) T&M
DVX CL04-01 Expansion Controller $* (1) T&M
DVX CL06-XX Master Controller $* (1) T&M
DVX CL08-XX Synchronous Expnsn $* (1) T&M
Contrllr
DVX CL09-01 Asynchronous Controller $* (1) T&M
DVX DN01-01 Net Cntrlr Intrfce Adpter $* (1) T&M
DVX CRS Comm Resrce Srvr 8 Port) $* (1) T&M
DVX CRS Comm Resrce Srvr (16 port $* (1) T&M
SUN 4/75-32-P43 SPARCstation II $* T&M
SUN 4/40FC-8-P40 SPARCstation IPC $* T&M
Wyse Datamanger Personal Computer 20MB $* (2) T&M
Wyse Datamanager Personal Computer 80MB $* (2) T&M
AST Datamanger Personal Computer 80MB $* (2) T&M
AST Datamanager Personal Computer 150MB $* (2) T&M
Genicom 3210 printer $* T&M
Genicom 3410 Printer $* T&M
Okidata Printer $* T&M
HP Paintjet Printer $* T&M
GNP Comm Intrfce $* T&M
Logicraft Rmt Com Srvr Personal Computer $* T&M
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNISON (Call Center Systems) MODEL DESCRIPTION BMMC INSTLL/REMVL
----- ----------- ---- ------------
<S> <C> <C> <C> <C>
Sony Optical Drive $* T&M
Pinnacle Micro Optical Drive $* T&M
Chase IOLAN Terminal Server $* T&M
Exabyte 8MM Ext. Tape Sub-System $* T&M
</TABLE>
(1) Spares provided by DAVOX
(2) Assumes standard configuration consisting of internal hard drive, floppy,
external color monitor
* Omitted: Confidential Treatment Requested
<PAGE>
EXHIBIT E
SCHEDULE OF PARTS SERVICES
1. Davox shall furnish, on a consigned basis and in the quantities mutually
agreed upon by GSSC and Davox, all parts necessary for the maintenance of
Davox proprietary equipment in consideration of customer location,
quantities of Customers within any given service city area of GSSC,
quantity and mix of Davox product and actual usage experienced. The parts
shall at all times be subject to Davox's direction and control. Upon
termination of this Agreement, GSSC has the option to purchase the parts at
preferred prices to be mutually agreed upon at that time or return them to
Davox. Any such part or equipment which has been damaged as a result of
GSSC's neglect shall be purchased by GSSC Davox reserves the right to
verify the condition of any returned parts and equipment through normal
testing and inspection procedures, within five (5) business days or
receipt.
2. During the term of this agreement GSSC will provide the following Parts
Services to Davox:
a. Maintain depots for stocking of Parts in each open Service City and
keep records of the receipt, disbursement and use of such Parts;
b. Utilize the same procedures in the safekeeping and record keeping of
Davox's Parts as it uses in maintaining its own Parts and records;
c. Conduct periodic inventories of Davox's Parts and provide Davox with
an inventory report immediately after its completion. GSSC will have
ninety (90) days to reconcile any inventory discrepancies prior to
reimbursement. GSSC agrees to permit, during regular business hours,
an onsite audit of any of GSSC's Parts stocking location upon request
of Davox. Davox may request additional inventories to be taken and
GSSC will comply at a mutually agreeable fee.
e. Procure sufficient inventory to Support OEM equipment.
d. Replenish and/or expand the inventory of Parts as mutually agreed to
by Davox and GSSC.
3. If Davox does not notify GSSC of any discrepancies within sixty (60) days
of receipt of a reconciliation inventory report, specifically identifying
any discrepancies, such inventories will be deemed to be conclusive and
agreed to by Davox; and Davox will thereupon release and discharge GSSC
from any liability for discrepancies in the inventory levels discovered
thereafter. GSSCs responsibility for unreconciled inventory discrepancies
will be subject to a 2% annual industry standard shrinkage factor.
4. During the term of this agreement and any extensions thereof, Davox shall
make available, at no charge, to GSSC, a module repair program which GSSC
will utilize to repair failed Davox proprietary modules. When Davox is
informed that spares have been used to replace a faulty Davox component,
board, subassembly, or assembly at a Davox Customer site, Davox will
express ship a replacement at no cost to GSSC. The faulty part shall be
shipped to Davox or a Davox designated repair vendor within 10 (ten) days
of receipt of
<PAGE>
the replacement at Davox's expense. GSSC will utilize this program to
repair and/or replace failed Davox proprietary modules at no cost to GSSC,
inclusive of shipping, handling, taxes, and insurance. Title to the
replacements shall vest in the customer, and title to the replaced modules
shall vest in Davox.
5. In the event that Parts Support commitments described in this Agreement are
not maintained by Davox and it becomes necessary for GSSC to notify Davox
that one or more parts are required for an emergency, then Davox will take
immediate action to ship the parts required by GSSC, at Davox's expense and
by the method mutually agreed upon by Davox and GSSC, within 24 hours of
receipt of such notice from GSSC. However, GSS's response time shall
commence upon receipt of Davox provide parts, at the GSSC branch office or
customer site from which the Field Engineer is to be dispatched.
6. GSSC will not have title to any equipment or to any spare parts which Davox
may supply unless GSSC specifically purchases them. GSSC will bear the
risk of all loss or damage with respect to equipment and parts in GSSC's
possession with the terms set forth in this section.
7. GSSC will not be obligated to respond to any service requests unless
sufficient spare Davox provided parts are available to the responding GSSC
engineer either at the GSSC branch office or at the customer site,
provided, however that GSSC has notified Davox of its requirements pursuant
to paragraphs 1 and 5. In the event that Davox parts are not available at a
particular GSSC branch office, but located at another GSSC facility, Davox
may at its own cost, inclusive of freight and insurance, and at Davox's
sole risk, direct GSSC to ship the required part. GSSC will use its best
effort to expeditiously ship, but GSSC shall not be liable for timely
shipment nor required to dispatch its Field Engineer until the required
Davox provided parts arrive.
8. The cost of repair, transportation and handling of Parts to and from Davox
for Davox proprietary Parts shall be paid by Davox. For nonproprietary OEM
parts, the cost of repair, transportation and handling will be at no cost
to Davox and will be the responsibility of GSSC.
9. Upon termination of this Agreement, Representative will provide Davox with
a final reconciliation inventory together with the shipment of remaining
Parts to Davox at Davox's expense.
<PAGE>
EXHIBIT F
SCHEDULE OF GSSC'S SERVICE CITIES
Northeast Midwest
- --------- -------
Boston Pittsburgh
Meriden Cincinnati
NYC Detroit
LI Louisville
Fairfield Cleveland
Buffalo/Rochester Chicago
Omaha
St. Louis
Indianapolis
Kansas City
Eastern South Central
- ------- -------------
Rockville Austin
Baltimore Houston
Richmond Dallas
Philadelphia
Charlotte
Southeast West
- --------- ----
Atlanta Denver
Orlando Seattle
Tampa San Francisco
Huntsville Los Angeles
Miami San Diego
Phoenix
Canada
- ------
Toronto
<PAGE>
EXHIBIT G
---------
WORK AUTHORIZATION FORM
-----------------------
<PAGE>
EXHIBIT H
DAVOX MAINTENANCE AGREEMENT
<PAGE>
DAVOX CORPORATION
CONTINUUM/TM/
SUPPORT SERVICES AGREEMENT
This Support Services Agreement dated as of this day of ,
--------- ----------
199 entered into between Davox Corporation, a Delaware corporation with its
-
principal place of business at 6 Technology Park Drive, Westford, Massachusetts
01886 ("DAVOX") and with its principal place of business at
---------------
("Customer").
- -------------------------
1. CONTRACT COVERAGE
Davox agrees to provide Customer and Customer agrees to accept from Davox
support services under the terms and conditions set forth in this Agreement and
in accordance with the support services option selected by Customer (the
"Support Option") for the Davox computer hardware and peripheral equipment
(the "Equipment") and Davox computer software (the "Software") and workstations
(the "Workstation(s)") which collectively comprise a UNISON brand call
management system (a "UNISON System") as specified on the Support Services
quotation(s) (each a "Quotation") as may from time to time amend and be
incorporated herein by reference.
2. BASIC SERVICE HOURS
A. Customer Support Programs are managed from the Davox National Support
Center (the "N.S.C.").
N.S.C. hours for telephone assistance (the N.S.C. "800 Help Line") are
7:30 a.m. to midnight, Eastern time, Monday through Friday and 8:00 a.m.
to 5:00 p.m. Eastern time on Saturday, excluding Davox holidays ("N.S.C.
Standard Hours"). Customer is required to route all problems, questions
and requests for service on any UNISON System through the N.S.C. Help
Line. Normal service hours for on-site support are 8:30 a.m. to 5:30
p.m., local time, Monday through Friday, excluding Davox holidays ("Normal
Service Hours"). Davox holidays vary annually. A copy of the Davox
holidays in effect for the then current year will be furnished upon
request.
3. EXTENDED SERVICE HOUR CONTRACT
Several extended service hour options are available to Customer ("Extended
Service Hour Options"). Customer shall specify on the Quotation the
Extended Service Hour Option(s), if any, elected. IN THE EVENT NO EXTENDED
SERVICE HOUR OPTION IS DESIGNATED ON THE QUOTATION, NORMAL SERVICE HOURS
AND N.S.C. STANDARD HOURS SHALL APPLY. The days and hours of extended
service hour coverage shall be specified on the Quotation. Notwithstanding
anything herein to the contrary, Davox shall have no requirement to furnish
support services either
<PAGE>
remotely through the N.S.C. or on-site outside the service coverage hours
expressly contracted for.
4. SUPPORT OPTIONS
Customer shall specify on the Quotation the Support Option(s) covering the
applicable UNISON System for which support services are to be furnished.
Support Options covering Equipment and Software are set forth in category I
below (each a "System Support Option"). Support Options covering
Workstations are as set forth in category II below (each a "Workstation
Support Option"). Only one (1) System Support option may be selected to be
in effect at any one (1) Customer location. Customer agrees that where
Customer has multiple UNISON Systems at any one (1) location Customer shall
contract and. purchase the same System Support Option for all UNISON
Systems at said location.
I. System Support Service Options
Customer shall specify on the Quotation one (1) of the following System Support
Options:
. Comprehensive Support Services Coverage COMP
. Shared Support Services Coverage SHAR
A. Comprehensive Support Services Coverage (COMP)
----------------------------------------------
Comprehensive Support Services Coverage ("COMP") consists of on-site
Equipment support, remote and on-site Software support and access to remote
technical assistance, all as set forth in this Section.
Support
Customer is responsible for contacting the N.S.C. in the event of problems with
the UNISON System. Telephone support and remote diagnosis of problems is
available to Customer during N.S.C. Standard Hours, unless Extended Service
Hours have been agreed to pursuant to Section 3. Upon notification to the
N.S.C. that the UNISON System has malfunctioned or is inoperative, Davox shall
take such steps as are necessary, in Davox opinion, to correct the malfunction
or inoperation. These steps may consist, as Davox deems appropriate, of the
following: remote diagnosis of Equipment and Software malfunctions; on-site
diagnosis of Equipment malfunctions and repair or replacement or Equipment
components; on-site diagnosis or Software malfunctions and correction of
defects; or remote correction of Software defects and downloading of corrected
Software.
On-site support, when necessary, will be performed during Normal Service Hours.
Work performed outside Normal Service Hours shall be performed at Davox then
prevailing rates with a minimum of two (2) hours invoiced.
<PAGE>
Davox will install updates and engineering changes to the Software as may from
time to time be released pursuant to Section 8 of this Agreement.
Technical Assistance
The N.S.C. shall be available to Customer during N.S.C. Standard Hours.
Customer shall use the N.S.C. to report malfunctions with the Equipment or
Software and shall also be permitted to use the N.S.C. as a technical resource
relating to questions pertaining to the use, operation or performance of the
Equipment and Software. In the event Customer requests remote support from the
N.S.C. after N.S.C. Standard Hours, and support is made available, such support
shall be billable at Davox's then prevailing rates.
Limitations on Equipment and Software Covered
Only Davox manufactured and supplied Equipment and Software and any Davox
authorized third party equipment set forth on the Quotation accepted by Davox
will be serviced under Comprehensive Support Service Coverage. A list of Davox
then current authorized third party equipment will be furnished upon request.
B. Shared Support Services Coverage (SHAR)
---------------------------------------
The Shared Support Services Coverage ("SHAR") consists of remote and on-site
Software Support; replacement of malfunctioning Davox manufactured Equipment
components on an exchange basis; and access to remote technical assistance, all
as set forth in this Section.
Support
Customer is responsible for contacting the N.S.C. in the event of problems with
the UNISON System. Telephone support and remote diagnosis of problems is
available to Customer during N.S.C. Standard Hours, unless Extended Service
Hours have been agreed to pursuant to Section 3. Upon notification to the
N.S.C. that the UNISON System has malfunctioned or is inoperative, Davox shall
take steps to diagnosis the cause of such malfunction or inoperation. Customer,
shall assist Davox in diagnosing problems with the UNISON System. When in Davox
opinion a failure has occurred with the Davox manufactured Equipment, Davox will
ship replacement Equipment components to Customer, at Davox expense, for arrival
the next business day. Customer shall be responsible for removing the failed
component and installing the replacement component. Customer shall return the
failed Equipment component to Davox via surface carrier, at Customers expense,
using the packaging and return label provided with the replacement component.
Failed components must be returned to Davox within fourteen (14) days of receipt
of the replacement component(s), or Customer will be deemed to have purchased
the replacement component at Davox then prevailing list price for such component
and Davox shall issue an invoice which shall be due thirty (30) days from the
date thereof. When in Davox opinion there is a malfunction or inoperation of
the Software, Davox shall correct the failure and install a corrected version of
the Software on the UNISON System. Corrected versions of Software may be
installed, at Davox option, either via remote download or by means of on-site
installation. On-
<PAGE>
site installation and support of Software, when in Davox opinion on-site
presence is necessary, is included in SHAR. On-site servicing of Davox
manufactured and supplied Equipment is available upon request on a time and
materials basis.
Davox will install updates and engineering changes to the Software as may from
time to time be released pursuant to Section 8 of this Agreement.
On-site support, when necessary, will be performed during Normal Service Hours.
Work performed outside Normal Service Hours shall be performed at Davox then
prevailing rates with a minimum of two (2) hours invoiced.
Technical Assistance
The N.S.C. shall be available to Customer during N.S.C. Standard Hours.
Customer shall use the N.S.C. to report malfunctions with the Equipment or
Software and shall also be permitted to use the N.S.C. as a technical resource
relating to questions pertaining to the use, operation or performance of the
Equipment and Software. In the event Customer requests remote support from the
N.S.C. after N.S.C. Standard Hours, and support is made available, such support
shall be billable at Davox then prevailing rates.
Limitations on Equipment and Software Covered
Only Davox manufactured and supplied Equipment and Software will be serviced
under Shared Support Services Coverage. Third party equipment and software,
including but not limited to, workstations, personal computers, and terminals
are not covered.
II. Workstation Support Services
----------------------------
Customer shall specify on the Quotation one (1) of the following Workstation
Support Options covering workstations:
Replacement Support Coverage WSP1
Repair Support Coverage WSP2
A. Replacement Support Coverage (WSP1)
-----------------------------------
Davox will provide the telephone assistance via the N.S.C. "800 Help Line" to
aid Customer in diagnosing workstation system failures to the module level and,
when in Davox's opinion a failure has occurred, will ship replacement components
to Customer for arrival the next business day. Customer shall return the failed
component(s) to Davox via surface carrier at Customer's expense using the
packaging and return label provided with the replacement component(s). All
defective component(s) must be returned to Davox within fourteen (14) days after
Customer's receipt of the replacement component(s) or Customer will be deemed to
have purchased the replacement
<PAGE>
component at Davox then prevailing list price for such component and Davox shall
issue an invoice which shall be due thirty (30) days from the date thereof.
On-site visits by Davox service personnel are not included under this
Replacement Support Coverage.
B. Repair Support Coverage (WSP2)
------------------------------
Davox will provide telephone assistance via the N.S.C. "Help Line" to aid
Customer in diagnosing workstation system failures to the module level. Upon
determination by Davox that a component has failed, Customer will be given a
return authorization number by the N.S.C. and instructed to return the
component(s), at Customer's expense, to a designated Repair Depot Center. As
soon as practical after receipt, Davox will repair or replace the component and
return it to Customer via surface carrier, at Davox's expense. Davox shall make
available to Customer, at Customer's expense at Davox's then current pricing, a
complement of spare devices to be used in the interim while component(s) are in
the repair cycle. Davox will recommend the type and quantity of spares which
the Customer should have on hand upon request by the Customer. On-site visits
by Davox service personnel are not included under this Repair Support Coverage.
5. ELIGIBILITY
Davox reserves the right, at Customer's expense, to inspect and qualify for
support services Equipment or Software or Workstation which was not subject to
Davox warranty coverage or a Davox Support Option immediately prior to the date
of the Quotation.
6. TERM
The initial period of coverage shall commence on the date specified on the
Quotation or if no date is specified the date the Equipment and/or Software
and/or Workstation is installed and ready for live dialing (the "Go Live Date")
and shall continue for a period of one (1) year (the "Initial Term"). Coverage
under additional Quotations incorporated hereunder shall commence on the date
specified on the Quotation or if no date is specified, the Go Live Date of the
Equipment and/or Software and/or Workstation and shall expire on a co-terminus
basis with the term then in effect. Thereafter, the Agreement shall
automatically renew for subsequent additional one (1) year terms, unless either
party shall have given the other written notification of its intention not to
renew coverage at least sixty (60) days prior to the anniversary date of the
Agreement.
Davox reserves the right, at any time, to evaluate any Equipment or Software or
Workstation, including its use and environment, and qualify continuance of
support services based upon changes, which, in Davox's sole opinion, are
reasonably required for the proper operation of any Equipment, Software or
Workstation and the continuance of the Support Option in effect hereunder.
7. PAYMENT
In return for the Services under the Support Option(s) or other coverage to be
provided, Customer agrees to pay to Davox the fees stated on the Quotation or
such fees as Davox may,
<PAGE>
from time to time, establish in accordance with this
Section prior to the commencement date of each term or as otherwise provided in
this Agreement. Davox may change the prices for Support Options by providing
Customer written notification of such changes ninety (90) days prior to the end
of a current term. The fees stated are annual charges, quoted and to be paid in
United States dollars, and shall be paid one (1) year in advance. Davox shall
invoice Customer annually, not more than sixty (60) days prior to the
commencement of the Initial Term or the expiration of the then current Term and
such invoice will be due upon receipt. Support services furnished on a "time
and material" basis will be invoiced as rendered and shall be due thirty (30)
days from the date of invoice.
Davox may suspend or terminate, at its sole option, this Agreement in the event
Customer fails to make prompt payment on or before the invoice due date or if
Customer otherwise breaches this Agreement.
With the exception of United States income taxes which Davox may be obligated to
pay as the result of payment made by Customer, Customer agrees to pay or
reimburse Davox for all other taxes, duties, fees, and all other charges which
may be levied by any governmental body as a result of this Agreement. All
amounts payable by Customer to Davox under this Agreement are exclusive of any
tax, levy, or similar governmental charge that may be assessed by any
jurisdiction, whether based on gross revenue, the delivery, use or possession of
the Products, the execution or performance of this Agreement or otherwise,
except for net income taxes assessed on Davox in the United States, by taxing
authorities within the United states. Subject to this exception, Customer shall
pay all taxes, levies or similar governmental charges or provide Davox with a
certificate of exemption acceptable to the taxing authority. If Customer is
required under the law of any applicable jurisdiction to deduct any withholding
taxes from payments to Davox, then (i) Customer shall notify Davox prior to
withholding any such taxes, (ii) the price payable by Customer for the products
shall be increased so that the actual amount received by Davox, net of all
taxes, will be equal to the prices set forth in the Agreement and invoiced
Customer and (iii) Customer will promptly furnish Davox with the official
receipt of payment of these taxes to the appropriate taxing authority.
In the event Customer requests support services under a Support Option and the
UNISON System is located at a site other than that shown as the Install Location
in the Quotation, Davox shall have the right to charge Customer for travel time
and travel expenses incurred as the result of such request to perform support
hereunder at another site.
8. UPDATES AND ENGINEERING CHANGES
Updates and engineering changes will be made to the Equipment or Software when
in Davox opinion such updates and changes are necessary to correct mechanical or
operational errors or deficiencies in order to conform the Equipment or Software
to Davox published specifications at the time of shipment.
Davox may from time to time elect to make changes to the Equipment or Software
to enhance performance, reliability, or serviceability and make such changes
available to Customer.
<PAGE>
All updates and changes released by Davox under this subsection shall be deemed
"Revisions". Davox shall provide Customer with general Revisions of the
Software upon release by Davox. Davox will be relieved of any liability
arising out of any errors or defects in any prior version or Revision of the
Software ten (10) days following delivery of the latest Revision. Customer may
elect to install or not install a Revision. In the event Customer elects not
to install the latest Revision, Davox will continue to support the immediate
prior Revision until the next new Revision is released. In no event shall
Davox be obligated to support a Revision other than the then latest Revision
or, the immediate prior Revision.
9. CUSTOMER RESPONSIBILITIES
To the extent applicable under the Support Option(s) selected, Customer is
obligated under this Agreement and agrees to:
A. Provide Davox free and full access to the Equipment, Software or
Workstations for the purpose of performing support.
B. Provide a safe working environment for Davox personnel and provide, at
no charge to Davox, adequate and safe storage space for spare
equipment as may be necessary.
C. At all times maintain complete responsibility for all controls and
files in the UNISON System.
D. Provide Davox, at no charge, access to and use of any machines,
attachments, and/or communications facilities which in Davox's
opinion, are necessary to facilitate support.
E. Maintain and control proper site environmental conditions.
F. Make available such time as may be requested by Davox for installation
of any engineering change order or Revision during the term of this
Agreement.
G. Notify Davox thirty-five (35) days prior to moving the UNISON System
from the Install Location specified on the Quotation.
10. RELOCATION OF EQUIPMENT
Upon request by Customer, Davox will provide a price quotation for the
relocation of any UNISON System or Workstation to a new site.
In the event any UNISON System or Workstation is moved or relocated by
other than Davox personnel, Davox shall have the right to evaluate the
UNISON System and Workstation and its new site and environmental conditions
as a condition for continuing
<PAGE>
Support on the UNISON System and Workstation and to bill Customer at its
then prevailing rates for such inspection and any labor, material and
adjustments which, in Davox's opinion, are necessary to restore the UNISON
System or Workstation to good operating condition.
Davox responsibility in the event Customer requests that Davox relocate a
UNISON System or Workstation shall be to deinstall the UNISON System or
Workstation at Customer's then current location and re-install the UNISON
System or Workstation at Customers new location. In the absence of prior
shipping instructions, Davox will select a carrier on behalf of Customer,
but in no event shall such carrier be construed to be an agent of Davox.
Risk of loss to the UNISON System or Workstation shall at all times reside
solely with Customer. IN NO EVENT SHALL DAVOX HAVE ANY LIABILITY FOR LOSS
OR DAMAGES TO PROPERTY OR INJURY OR DEATH TO PERSONS ARISING OUT OF
TRANSPORTATION OF THE UNISON SYSTEM OR WORKSTATION.
11. ADDITIONAL EQUIPMENT
Any Equipment, Software or Workstation acquired by Customer during the term
of this Agreement and placed into service at the Install Location shall be
added to the Agreement on a co-terminus basis. Customer shall execute a
Quotation which shall specify the Equipment and/or Software and/or
Workstations to be added to the Agreement and the additional charges for
the balance of the current term to be invoiced to the Customer.
12. EXCLUDED SUPPORT
Support to be provided under this Agreement does not include repair of
damage, replacement of parts or increase of service time attributable to
reasons other than normal wear and tear, including but not limited to the
combination or operation or use of Equipment, Software or Workstations with
materials not supplied by Davox or for purposes for which the Equipment,
Software or Workstation was not designed, unusual physical or electrical
stress, accident, neglect, acts of God, or misuse, abuse, or modification
of the Equipment, Software or Workstations by persons other than Davox.
When support service is required for reasons other than normal wear and
tear, services will be performed at Davox's then prevailing time and
materials rate and an invoice issued to the Customer. If Customer modifies
the Equipment, Software or Workstation or adds foreign devices to the
UNISON System or Workstation, then Davox may at its option, (i) terminate
this Agreement or (ii) support and service such modifications and foreign
devices at its then prevailing rates. Provisions or replacement of
operational supplies or media items are specifically excluded form support
services hereunder.
13. LIMITATION OF LIABILITY
DAVOX MAKES NO REPRESENTATIONS OR CONDITIONS OR WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF
<PAGE>
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR INFRINGEMENT, EXCEPT
AS PROVIDED IN THIS AGREEMENT. DAVOX DOES NOT WARRANT THAT THE FUNCTIONS
CONTAINED IN THE SYSTEM WILL MEET THE REQUIREMENTS OF THE CUSTOMER OR
THAT THE OPERATION OF ANY SOFTWARE WILL BE UNINTERRUPTED OR ERROR FREE.
IN NO EVENT SHALL DAVOX BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF DATA,
LOSS OR USE OF ANY COMPONENT OF THE SYSTEM, OR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR ANY KIND, IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR SUPPORT SERVICES PROVIDED HEREUNDER.
Davox's maximum liability regardless of the form of action taken shall not
in any event exceed the annual charges actually paid by Customer to Davox
for support hereunder for the then current term. Davox shall not be liable
to customer or any other third party for any injury to any person or
property where said injury arises out of Customer's use or application of
the Equipment, Software or Workstation, except for injuries arising out of
Davox's intentional wrong-doing or gross negligence. Customer shall
indemnify and hold harmless Davox from any and all damages, costs, and
expenses incurred by Davox in connection with any claim, suit or proceeding
relating to or arising out of the Customer's use or application of the
Equipment, Software or Workstation unless occasioned by such gross
negligence or intentional wrong-doing of Davox. The sole and exclusive
remedy of Customer hereunder with respect to a defective or inoperative
UNISON System or Workstation is to request Support as provided herein.
14. GOVERNING LAW
This Agreement and any transaction pursuant thereto shall be governed by
the laws of the Commonwealth of Massachusetts.
15. NOTICES
All notices provided for in this Agreement shall be given in writing and
shall be effective (i) when served by personal delivery or (ii) five (5)
days after being deposited, postage prepaid, in the mail and addressed to
the parties at their respective addresses as set forth in this Agreement or
as either party may later specify by written notice to the other.
16. ACTS OF GOD
Davox shall not be liable for damages or any delay or failure to deliver
arising out of causes beyond its reasonable control and without its fault
or gross negligence, including, but not limited to, acts of civil or
military authority, fires, riots, wars, embargoes, revolutions,
insurrections, rebellions, national emergencies, strikes, floods, acts of
God, earthquakes, explosions, storms, epidemics, quarantine restrictions,
labor disputes, transportation embargoes or delays in transportation, or
inability to obtain equipment or parts due to delays or backlog of
suppliers.
<PAGE>
17. REPLACEMENT OF COMPONENTS
When in the course of furnishing support services hereunder, Davox
determines it necessary to remove a defective or non-operating component to
the Equipment and replace it with a functioning component, the replacement
component shall become the property of Customer and the removed component
shall become the property of Davox.
18. GENERAL
This Agreement constitutes the entire agreement between the parties
relative to the subject matter hereof, and supersedes all proposals,
written or oral, and all other communications between the parties relating
to the subject matter of this Agreement.
No waiver, amendment, or modification of this Agreement shall be effective
unless it is in writing and signed by the parties hereto.
Davox reserves the right to subcontract for the performance of support and
other services to be provided under this Agreement. In such event,
however, the rights and obligations of Davox and Customer hereunder will
not be diminished.
Customer may not assign any of its obligations, rights, or remedies under
this Agreement and any such attempted assignment shall be null and void.
All Software furnished hereunder including, without limitation, all
Revisions thereto are furnished under license to Customer. The terms of
such license are as set forth in a certain and separate agreement between
the parties under which the Software was originally furnished to Customer,
or if no such agreement is in effect between the parties, the terms of
Davox standard software license shall apply, and Customer agrees to execute
such standard license terms upon request of Davox.
The invalidity, illegality, or unenforceability of any provision of this
Agreement shall in no way affect the validity, legality, or enforceability
of any other provision.
Titles or captions in this Agreement are inserted only as a matter of
convenience and for reference, and in no way define, limit, extend, or
describe the scope of this Agreement or the intent of any provision hereof.
<PAGE>
This Agreement shall be binding upon and inure to the benefits of the
parties and their respective successors, heirs, and assigns.
Agreed by: Agreed by:
Davox Corporation Customer
________________________________ ______________________________________
Signature Signature
________________________________ _______________________________________
Name and Title Name and Title
________________________________ _______________________________________
Date Date
<PAGE>
DVX/GSSC AUTHORIZATION FORM
REVISED 7/11/95
---------------
DATE: _________________ DVX SITE # __________________
ACCOUNT NAME: _____________________________________________________
SUITE/FLOOR: _____________________________________________________
STREET: _____________________________________________________
CITY: _____________________________________________________
STATE: ________________ ZIP: _______________
GSSC PC: _____________________________________________________
GSSC PRIMARY FE: _____________________________________________________
MILEAGE (CIRCLE): 0-50, 51-100, OVER 100
UPLIFT (CIRCLE): YES NO UPLIFT %
BASIC MONTHLY MTNC. CHARGE (BMMC): $ __________________________
GSSC SITE #:_______________________
SITE CONTACT: _____________________________________________________
PHONE: _____________________________________________________
SITE CONTACT: _____________________________________________________
PHONE: _____________________________________________________
APPROVAL
________________________________________
DATE:
________________________________________
APPROVED BY:
________________________________________
CONTRACT START DATE:
________________________________________
CONTRACT END DATE:
________________________________________
<PAGE>
DVX SITE CODE #: ____________
(___________) CONFIGURATION:
(_________)R(S):
<TABLE>
<CAPTION>
BMMC BMMC
MODEL LINES SN (EA) (EXT)
<S> <C> <C> <C> <C>
________________________________________
CAS 50 X
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
CAS500 X
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
CAS1000 X
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
CAS2000 X
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
X
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
DN01 ________________________________________
DN04 ________________________________________
________________________________________
________________________________________
OTHER X
________________________________________
</TABLE>
DIALER SUB-TOTAL $
___________________________________
<PAGE>
CONTROLLER(S):
<TABLE>
<CAPTION>
DRIVE BMMC BMMC
MODEL TYPE SN SIZE (EA) (EXT)
<S> <C> <C> <C> <C> <C>
______________________________________________
CRS 8 SLOT MB
______________________________________________
______________________________________________
______________________________________________
CRS 16 SLOT MB
______________________________________________
______________________________________________
______________________________________________
2000 (CL06) ______________________________________________
______________________________________________
______________________________________________
2200 (CL04) ______________________________________________
______________________________________________
______________________________________________
______________________________________________
3000 (CL08) ______________________________________________
______________________________________________
CONTROLLER SUB-TOTAL $
_____________________________________
</TABLE>
DVX SITE CODE # ____________
<TABLE>
<CAPTION>
BMMC BMMC
MANUF MODEL PART # QTY (EA) (EXT) SN
<S> <C> <C> <C> <C> <C> <C>
_________________________________________
SUN SPARC II 4/74M-32-P43 _________________________________________
_________________________________________
SUN SPARC IPC 4/40FC-8-P40 _________________________________________
_________________________________________
SUN SPARC 20 S20T1N-514-64-P4L _________________________________________
_________________________________________
SUN2200 SPARC 10 S10S-40(42)-32-P46 _________________________________________
_________________________________________
SUN SPAR
OTHER Classic 4/15(f)C-16-P43 _________________________________________
_________________________________________
_________________________________________
</TABLE>
<PAGE>
SMC MISC:
<TABLE>
<CAPTION>
BMMC BMMC
QTY (EA) (EXT) SN
<S> <C> <C> <C> <C> <C> <C>
________________________________________
SUN EXT HRD 1.05GB/545-ST ________________________________________
DRV
________________________________________
SUN EXT HRD 2.1GB/X567A-ST ________________________________________
DRV
________________________________________
MODEM PCEM72144F ________________________________________
________________________________________
SUN 150MBSUBS ________________________________________
YSTX660
________________________________________
SONY OPTICAL ________________________________________
DRIVE RM-
S350 ________________________________________
________________________________________
PINNACLE OPTICAL PM03-130 ________________________________________
MICRO DRIVE
________________________________________
SUN 8MM TAPE ________________________________________
________________________________________
GNP COM ________________________________________
DEVICE,
SPARC TO
CAS ________________________________________
________________________________________
LOGICRAFT SPARC TO
RCS COM HOST
DEVICE ________________________________________
________________________________________
MILAN TEN
BASED T
HUB ________________________________________
________________________________________
TERMINAL
SERVER ________________________________________
________________________________________
WYSE
TERMINAL ________________________________________
________________________________________
OTHER ________________________________________
</TABLE>
SMC SUB-TOTAL $
________________________________________
<PAGE>
DVX SITE CODE # ___________
MANAGER:
<TABLE>
<CAPTION>
BMMC BMMC
MANUF. MODEL TYPE QTY (EA) (EXT) SN
<S> <C> <C> <C> <C> <C> <C>
______________________________________
WYSE 20MB ______________________________________
______________________________________
WYSE 80MB ______________________________________
______________________________________
AST 150MB ______________________________________
______________________________________
AST 80MB ______________________________________
______________________________________
OTHER ______________________________________
______________________________________
</TABLE>
DATAMANAGER SUB-TOTAL $
______________________________________
PRINTERS:
<TABLE>
<CAPTION>
BMMC BMMC
MANUF. MODEL TYPE QTY (EA) (EXT) SN
<S> <C> <C> <C> <C> <C> <C>
______________________________________
GENICOM 3210 ______________________________________
______________________________________
GENICOM 3410 ______________________________________
______________________________________
HP PAINT JET ______________________________________
______________________________________
HP 550 ______________________________________
______________________________________
______________________________________
HP 560 ______________________________________
______________________________________
HP INKJET ______________________________________
______________________________________
DEC LA-424 ______________________________________
______________________________________
SUN CPRN-360 NEWSprntr ______________________________________
______________________________________
OTHER ______________________________________
</TABLE>
PRINTER SUB-TOTAL $
__________________________________
SUB-TOTAL BMMC $
__________________________________
<PAGE>
Exhibit I
Software License Agreement
This agreement is made this ____ day of __________ 1995, by and between Davox
Corporation, of 6 Technology Park Drive and Grumman Systems Support Corporation,
located at 10 Orville Drive, Bohemia, New York 11716 ("Customer").
This Software License (the "Agreement") applies to all the Smart Management
Center ("SMC"), or Davox UNISON System, PRELUDE System, SCALE System and/or any
other Davox products which incorporate Davox software. Customer has been
advised that the SMC, UNISON System, PRELUDE System, SCALE System and other
Davox software contain products licensed to Davox Corporation ("Davox") and
licensed to Davox from third party vendors (the "Third Party Software").
Notwithstanding anything in the Grumman - Davox Third Party Service Agreement to
the contrary, the Third Party Software, along with Davox's proprietary software,
is furnished to Customer under the license provided herein.
Subject to the terms of this Agreement, Davox hereby grants to Customer a
personal, non-transferable, nonexclusive license (the "License") to use the
software contained in, furnished with, or made part of, the SMC, the Davox
UNISON System, PRELUDE System or SCALE System and any other Davox product
described in the Grumman - Davox Third Party Service Agreement (the "Software")
solely for Customer's own business use and only in the external hard disk on
which the Software is first provided or installed, except as otherwise herein
provided. Customer's business use shall be defined as third part servicing of
Davox Products as defined and provided for in the Davox - Grumman Third Party
Service Agreement. The Software may be copied, in whole or in part, subject to
the proper inclusion of any and all copyright and proprietary notices, only as
may be necessary for Customer's use on such Hard Disk solely for archival and
backup purposes, or to replace a worn or defective copy. Customer shall not copy
any manuals or technical information provided with the Software, except for
those copies necessary for Customer to fulfill its obligations under the Davox -
Grumman Third Party Service Agreement. If Customer is unable to operate the
Software on the single Hard Disk due to an equipment malfunction, the
<PAGE>
Software may be transferred temporarily to another Hard Disk during the period
of equipment malfunction.
Customer shall not reverse compile, disassemble or otherwise reverse engineer,
embed within any other software product, or modify in any manner, including
modifications to source code with respect thereto, the Software in whole or in
part. Customer agrees and acknowledges that the Software is confidential and
proprietary information. Customer shall not disclose, provide or otherwise make
available the Software or any part of copies thereof to any person other than
employees of the Customer who have a legitimate need theretofore, without prior
written consent of Davox. Customer shall take all appropriate action by
instruction, agreement or otherwise, with any persons permitted access to the
Software necessary to satisfy Customer's obligations under this Agreement. All
copies of the Software, whether provided by Davox or made by Customer as
permitted by this Agreement including without limitation, translations,
compilations, or partial copies, are the property of Davox and may not be used
or disclosed except as permitted by this Agreement.
All rights, title and interest to, and all applicable rights in patents,
copyrights and trade secrets in the Software or any of its parts shall remain
vested in Davox or in any third party vendor from whom Davox has acquired rights
to license the Software, notwithstanding the grant of the License pursuant to
the terms of this Agreement.
Unless otherwise provided herein, the License shall expire at such time as
Customer discontinues use of the applicable Software on the single Hard Disk for
which the Software is first provided, but otherwise shall be without restriction
as to time.
Notwithstanding the foregoing, Davox shall have the right to terminate the
License if Customer fails to pay any and all required license fees, if any, or
otherwise fails to comply with the terms and conditions of the License set forth
herein or in the Davox - Grumman Third Party Service Agreement or fails to cure
any breach of this Agreement or the Third Party Service Agreement within ten
(10) days after receipt of written notice from Davox. Customer agrees that upon
expiration of the License or upon notice of termination thereof, it will
immediately return or
<PAGE>
destroy the Software and all portions and copies thereof as directed by Davox
and, if requested, will certify in writing to Davox as to the destruction or
return of the Software and all copies thereof.
Davox Corporation and any third party from whom Davox Corporation has acquired
rights to license the Software or any part thereof (the "Licensed Software") is
a direct and intended third party beneficiary of this Agreement to the extent
the Agreement relates to the Licensed Software, and may enforce this Agreement
directly against Customer to such extent, provided, however, that no such
licensor shall be liable to the Customer for any general, special, direct,
indirect, consequential or other damages arising out of or relating to the
Licensed Software.
Except as otherwise expressly set forth herein, all other terms of the Third
Party Support Services Agreement shall remain in full force and effect. Davox
represents that it is either the owner of the Software or has the right to grant
said license herein.
Davox shall indemnify and hold Customer harmless against any loss, liability,
damage, cost or expense, including reasonable attorney's fees, incurred in
connection with any claim, suit, or proceeding brought against Customer based on
any claim that Equipment or Software supplied hereunder infringes on any valid
United States patent or copyright and will pay resulting costs, damages and
attorney's fees if (i) Customer promptly notifies Davox in writing of such
claim, (ii) Customer gives Davox sole control of the defense and all related
settlement negotiations and (iii) Customer, at Davox's expense, provides Davox
with reasonable assistance in the defense of such claim. If any claim which
Davox is obligated to defend has occurred or is likely to occur, Customer agrees
to permit Davox, at its option and expense, either to procure the right for the
Customer to continue using the Equipment or Software or to replace or modify the
Equipment or Software so that it becomes non-infringing. If neither of the
foregoing alternatives is available on terms which are acceptable to Davox, the
Customer agrees to return the Equipment or Software upon written request by
Davox and to accept a credit equal to the amount paid by Customer less
depreciation at a rate per year over the life of four years in the case of
Software and Equipment.
<PAGE>
Davox shall have no obligations to Customer under any provisions of this License
with respect to any claim based on the use of Equipment or Software in
combination with equipment, devices, or software not supplied by Davox or upon
the use of the Equipment or Software in a manner for which they were not
intended. The foregoing states the sole and exclusive liability of Davox for
infringement of any kind and is in lieu of all warranties, express or implied,
in regards thereto.
Customer shall indemnify and hold Davox harmless against any loss, liability,
damage, cost or expense, including reasonable attorney's fees, incurred in
connection with any claim, suit or proceeding brought against Davox so far as it
is based on a claim relating to the manufacture or sale of any Equipment or
Software modified or altered by Customer or combined with any equipment, device,
or software not supplied by Davox to the extent that such claim, suit or
proceeding is due to Customer's actions.
Agreed to: Agreed to:
Davox Grumman Systems Support Corp.
By:___________________________ By: _______________________________
Title: Title:
Date: Date:
<PAGE>
Exhibit J
Non-Disclosure Agreement
------------------------
WHEREAS, Davox Corporation ("Davox") wishes to transmit to Grumman Systems
Support Corporation located at 10 Orville Drive, Bohemia, New York, 11716
("Recipient"), certain information which it deems to be proprietary and
confidential, namely, _______________________________________________________
_____________________________________________________________________________.
WHEREAS, Recipient desires to receive such information for the specific purpose
of __________________________________________________________________________.
THEREFORE, it is agreed as follows:
1. The Recipient acknowledges that all confidential or proprietary
information shall remain the property of Davox; and the Recipient
agrees:
a) to maintain all confidential or proprietary information provided
by or on behalf of Davox (including all portions or copies
thereof) as confidential in the same manner as its own
proprietary information is maintained;
b) not to disclose any confidential or proprietary information
provided by or on behalf of Davox to any third party;
c) not to use any confidential or proprietary information provided
by or on behalf of Davox except for the specific purpose stated
herein;
d) may only reproduce the confidential or proprietary information
provided by or on behalf of Davox subject to the License; and
e) to inform its employees who have a "need to know" any
confidential or proprietary information provided by or on behalf
of Davox of the Recipient's obligations hereunder, and to use its
best efforts to insure compliance by its employees.
<PAGE>
2. Nothing contained in this Agreement shall be construed as granting or
conferring by implication or otherwise any rights, by license or
otherwise, to trademarks, inventions, copyrights or patents of Davox.
3. The term "confidential or proprietary information," as used in this
Agreement, shall mean any data or information that is clearly marked
as "Proprietary, Trade Secret or Confidential," which is disclosed to
Recipient. It is understood that it does not include information
which:
a) is in or subsequently becomes part of the public domain through no
fault of the Recipient;
b) is lawfully received from a third party having the right to
disclose such information;
c) is independently developed by Recipient without breach of this
Agreement;
d) is disclosed with the written approval of Davox; or
e) is obligated to be produced under order of a court of competent
jurisdiction.
Confidential or proprietary information also includes data or
information directly developed and related to that arising, or derived
from confidential or proprietary data or information furnished to the
Recipient.
4. With respect to future plans (product, marketing, financial or other),
Recipient understands that such plans are subject to change without
notice at any time and that Davox shall have no obligations to execute
such plans and shall have no liability as a result of any change to
such plans.
5. Upon request of Davox, Recipient shall promptly deliver to Davox all
written records of confidential or proprietary information of Davox
provided to Recipient or a writing certifying their loss or
destruction.
6. The Recipient acknowledges that any remedy at law for any breach of
this Agreement may be inadequate and that Davox shall be entitled to
seek specific
<PAGE>
performance or any other mode of injunctive or other equitable relief
to enforce its rights hereunder.
7. This Agreement shall be binding upon the Recipient and its successors
and assignees and shall inure to the benefit of Davox and its
successors, agents and assignees.
8. This Agreement is governed by the laws of the Commonwealth of
Massachusetts.
9. If any provision of this Agreement or its application is held to be
invalid, illegal or unenforceable in any respect, the validity,
legality or enforceability of any of the other provisions and
applications herein shall not in any way be affected or impaired.
10. This Agreement sets forth the entire understanding between the parties
with respect to the subject matter hereof and may not be modified,
changed or amended, except by a writing signed by both parties.
11. Recipients obligation of confidentiality shall terminate three (3)
years after the date of disclosure.
Agreed to: Agreed to:
Grumman Systems Support Corporation Davox Corporation
By: ______________________________ By: ______________________________
Title: ___________________________ Title: ___________________________
Date: ____________________________ Date: ____________________________
_____________________________________________________________________________
<PAGE>
For Internal Use Only
- ---------------------
Date of Initial Disclosure: _____________________________
By: _____________________________________________________
Place: __________________________________________________
Approval obtained from: _________________________________
Date:______________ Initial: ____________________
<PAGE>
EXHIBIT 22.
DAVOX CORPORATION
List of Subsidiaries
<TABLE>
<CAPTION>
Name of Subsidiary Jurisdiction of Incorporation
- ------------------------------------- ------------------------------
<S> <C>
Davox Securities Corporation Massachusetts
Davox (Europe) Limited United Kingdom
Davox Corporation Hong Kong Limited Hong Kong
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our reports included in this Form 10-K, into Davox Corporation's
previously filed Registration Statements file Nos. 33-16472, 33-26265, 33-31756,
33-47618, 33-47619 and 33-51578 on Form S-8.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 22, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 12,935,907
<SECURITIES> 0
<RECEIVABLES> 5,124,627
<ALLOWANCES> 665,030
<INVENTORY> 1,009,029
<CURRENT-ASSETS> 18,456,890
<PP&E> 1,865,398
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,824,562
<CURRENT-LIABILITIES> 9,867,830
<BONDS> 44,891
0
0
<COMMON> 684,579
<OTHER-SE> 10,251,408
<TOTAL-LIABILITY-AND-EQUITY> 20,824,562
<SALES> 23,382,089
<TOTAL-REVENUES> 37,556,071
<CGS> 7,155,766
<TOTAL-COSTS> 16,451,473
<OTHER-EXPENSES> 4,020,350
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 421,622
<INCOME-PRETAX> 5,340,423
<INCOME-TAX> 534,176
<INCOME-CONTINUING> 4,806,247
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,806,247
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.62
</TABLE>
